NEW DELHI, March 8 (Reuters) - State Bank of India said on Friday it would link savings bank deposits and short term loans to the repo rate of the Reserve Bank of India from May.
However, the state-run lender also said it was exempting savings account holders with balances up to 100,000 rupees ($1,400) and borrowers with an overdraft limit of up to 100,000 rupees from the plan.
SBI is the first Indian bank to link deposit and short term loans with repo rate.
Indian banks have been reluctant to lower lending rates meaningfully, despite repo rates cut by the central bank, citing high deposit rates. That has limited the impact of repo rate cuts to borrowers.
$1 = 70.0050 Indian rupees Reporting by Nidhi Verma; Editing by Mark Potter