Mumbai, Aug 7 (IANS) The State Bank of India (SBI), the country's largest lender by assets, here on Wednesday cut the benchmark lending rates by 15 basis points (bps) across tenors, shortly after the Reserve Bank of India (RBI) slashed interest rates by a larger-than-expected 35 bps to boost the economy.

SBI's one-year marginal cost of fund-based lending rate (MCLR) will come down to 8.25 per cent from 8.40 per cent with effect from August 10.

"The SBI has effected full transmission of repo rate cut by the RBI and has passed on the benefit of repo rate reduction by 85 bps during the current financial year (FY20) to its cash credit and overdraft customers with limits above Rs 1,00,000," the SBI said.

The RBI, which on Wednesday cut interest rates fourth time in a row this year, had earlier rapped the public sector lenders over slow transmission of rate cuts.

RBI Governor Shaktikanta Das said after the 35 bps repo rate cut, transmission of policy repo rate reductions to the weighted average lending rates (WALRs) on fresh rupee loans of banks had improved marginally since the last meeting of the Monetary Policy Committee (MPC).

Overall, banks have reduced WALRs on fresh rupee loans by 29 bps during the current easing phase (February-June). After its fourth cut in MCLR for the year, home loans had become cheaper by 35 bps since April 10, the RBI said.

The RBI decision to cut repo rate is perhaps a recognition that monetary policy works best with unanticipated surprises to market. The RBI has also unveiled a host of bazookas to tackle the recent growth pangs even as it marginally lowered the FY20 growth forecast.

The decision to make available NEFT platform 24/7 and on-tap authorisation will add depth to retail payments (currently around 85 lakh transactions a day). Reduction in the risk weightage for consumer credit will free up capital from the banking sector for productive use.

Similarly, permitting banks to on-lend through NBFCs will facilitate credit flow to priority sectors.