SBI Welcomes New Calculation Methodology

State Bank of India (SBI), which controls close to quarter of the financial system, on Thursday welcomed the final guidelines on marginal cost of funds-based methodology for interest rate calculation, saying with this the domestic banking sector has moved closer to global practices.

The nation's largest lender also said though the Reserve Bank directive on the new pricing methodology is for fresh loan pricing only, existing SBI customers can migrate to the latest system.

"SBI welcomes the final guidelines on marginal cost of funds methodology for interest rates on advances issued today by the Reserve Bank," Chairperson Arundhati Bhattacharya said. "With the marginal cost of funds, including tenor premium, we have moved closer to international manner of benchmark rates," she added.

She said while the guidelines will benefit the new customers, "existing (SBI) customers will also have an option to shift to the new regime with some conditions."