The State Bank of India on Monday announced that it has reduced marginal cost of lending rate (MCLR) and interest across all tenors. SBI in a release said that it will reduce interest rates by 10 basis points from tomorrow. This is the rate reduction in the current fiscal year by the public sector lender.

MCLR rates are based on the bank’s own cost of funds. One year MCLR has been reduced to 8.15 percent from 8.25 now. The MCLR is linked to the retail lending rates. Other banks may also follow SBI’s step and reduce their MCLR.

The retail term deposit rates have been slashed by 20-25 bps and bulk term deposit rates by 10-20 bps. SBI said the decision was taken dueto “falling interest rate scenario and surplus liquidity.”

The Reserve Bank of India had last week asked banks to link their lending rates on floating rate loans to retail, personal and MSME borrowers to an external benchmark from October 1.With a network of over 22,000 branches, SBI is India’s largest commercial bank.