Which Indian bank became the first to link its interest rates directly to the Reserve Bank of India RBI repo rate?

Introduction / Context:
This question checks awareness of recent financial sector developments in India, particularly reforms in how banks set interest rates. The Reserve Bank of India, or RBI, uses the repo rate as an important monetary policy tool. More recently, commercial banks have started linking some of their lending and deposit rates directly to this repo rate. Knowing which Indian bank first moved to explicitly link its interest rates to the RBI repo rate is a common static banking awareness topic that appears in competitive examinations.

Given Data / Assumptions:

• The focus is on the first Indian bank to link its interest rates directly to the RBI repo rate.
• Options list four major private and public sector banks.
• We assume the question refers to the widely reported step where a bank tied certain loan and deposit products to the external benchmark of the repo rate.
• General knowledge of banking reforms and financial news is expected from the candidate.

Concept / Approach:
In the traditional system, banks used internal benchmarks such as the base rate or later the marginal cost of funds based lending rate. The RBI encouraged a shift toward external benchmarks including the repo rate. The large public sector bank State Bank of India was the first major Indian bank to publicly adopt the repo rate as an external benchmark for specific floating rate loans and deposits. Thus the approach is to recall which bank made headlines for being first in aligning retail rates with the policy rate in order to improve transparency and quicker transmission of monetary policy.

Step-by-Step Solution:
Step 1: List the given options mentally and recall any recent financial news involving each bank.Step 2: Identify which bank was reported as first in tying savings account and short term loan rates to the RBI repo rate.Step 3: Remember that State Bank of India made an announcement linking some products directly to the repo rate as an external benchmark.Step 4: Note that while private banks such as HDFC Bank, Axis Bank and Yes Bank are also active innovators, they were not the first to be highlighted for this specific external benchmark move in exam oriented static awareness notes.Step 5: Conclude that SBI is the correct answer.

Verification / Alternative check:
To verify, one can think of common exam preparation sources and banking awareness capsules, which often highlight State Bank of India as the first major Indian bank to link certain lending rates to the RBI repo rate. Additionally, SBI is the largest public sector bank and often serves as a trend setter for other banks in the system. This background supports the conclusion that SBI was the first among the listed options to formally link its rates to the repo rate under the externally benchmarked lending rate framework.

Why Other Options Are Wrong:
HDFC Bank, Axis Bank and Yes Bank are important private sector banks, but they were not recorded as the first Indian bank to adopt repo linked interest rates in the way the question describes. They may have followed with similar products later, but the question specifically asks for the first, so these options do not fit the required milestone event.

Common Pitfalls:
Candidates sometimes assume that an agile private bank must have been the first mover, which leads them to choose HDFC Bank or Axis Bank. Others may not distinguish between various rate reforms, such as the introduction of the marginal cost based lending rate, and can confuse that with repo based benchmarking. Careful reading of the phrase first bank to link interest rates to the RBI repo rate and awareness of major headlines prevent these mistakes.

Final Answer:
State Bank of India SBI was the first Indian bank to link its interest rates directly to the RBI repo rate.