New Delhi, May 7 (IANS): The country's largest lender State Bank of India (SBI) on Thursday reduced its MCLR by 15 bps across all tenors with effect from May 10 while offering a new product for senior citizens in Retail Term Deposit segment.

The one-year MCLR (Marginal Cost of Funds-based Lending Rate) comes down to 7.25 per cent per annum from 7.40 per cent.

It is the 12th consecutive reduction in bank's MCLR.

MCLR is the minimum lending rate below which a bank is not permitted to lend. It is an internal reference rate for banks to determine the interest they can levy on loans.

With the cut in MCLR, EMIs on eligible home loan accounts (linked to MCLR) will get cheaper by about Rs 255 for a 30-year-loan of Rs 25 lakh.

The SBI also said that in view of adequate liquidity in the system as well as with the bank, it has also pruned its interest rates on retail term deposits by 20 bps for 'up to 3 years' tenure, effective from May 12, 2020.

But the bank protected the interests of senior citizens in the current falling rate regime, by introducing a new product 'SBI Wecare Deposit' in the Retail Term deposit segment.

Under this new product, an additional 30 bps premium will be payable for senior citizens' retail term deposits with "5 years & above" tenure only. This scheme would be in effect up to September 30, 2020.

Thus, the effective rate of interest for Retail TDs of Senior Citizens will be 50 bps higher for Retail TD of 'below 5 years' tenure than the rate applicable for the general public (no change in premium).

For Retail TD of '5 years & above' tenure (new product) will be 80 bps higher than the rate applicable for the general public (30 bps extra premium). This additional premium will not be payable in case of premature withdrawal of such deposits.