The country's largest lender - State Bank of India (SBI) - has linked all its floating-based loans for micro, small & medium enterprises, housing and retail to repo rate as the external benchmark from today. Repo rate is the key interest rate at which the Reserve Bank of India (RBI) lends short-term funds to commercial banks. Adopting repo rate as external benchmark means that any changes in the key interest rate by the RBI will be passed on directly to the customers. SBI has a 2.65 per cent or 265 basis-points mark-up over the repo rate, as mentioned on its website- sbi.co.in. The RBI had cut the repo rate by 35 basis points or 0.35 percentage points to 5.40 per cent on August 7. As a result, now SBI's external benchmark rate stands at 8.05 per cent (5.40 per cent + 2.65 per cent), according to SBI.

For a term loan up to Rs 30 lakh for salaried class, SBI charges a premium of 15 basis points on the external benchmark rate (EBR). That means the effective home loan rate now stands at 8.20 per cent (8.05 per cent + 0.15 per cent), according to bank's website.

Here's the home loan interest rate structure for salaried class borrowers:

Loan Amount Interest rate for salaried class home buyers Term Loan Up to Rs 30 lakh External benchmark rate (EBR) + 15 basis points

ER: 8.20%

(ER: Effective Rate) Above Rs 30 lakh to Rs 75 lakh EBR + 40 basis points

ER: 8.45% Above Rs 75 lakh EBR + 50 basis points

ER: 8.55%

(Source: sbi.co.in)

SBI - which introduced floating rate-based home loans in July- said it has made modifications in the scheme to comply with the latest regulatory guidelines. Earlier this month, the Reserve Bank of India (RBI) mandated banks to link certain loans to the external benchmark based interest in a bid to allow faster transmission of its rate cuts to consumers.