India’s largest lender State Bank of India (SBI) has raised its marginal cost of lending rate (MCLR) on loans by 10 basis points, effective Friday (July 15). The move follows the similar move by several other lenders against the backdrop of repo rate hikes by the Reserve Bank of India (RBI) to control inflation in the country.
The MCLR hike will raise loan interest rates for new and existing borrowers, including equated monthly instalments (EMIs) for home loans, vehicle loans or any other loans linked to this benchmark rate.
SBI’s one-year benchmark marginal cost of lending rate has increased from 7.40 per cent to 7.50 per cent, while its rates for overnight, one month and three months have been increased from 7.05 per cent to 7.15 per cent, according to a notification on the state-owned lender’s website. The MCLR for six months has increased from 7.35 per cent to 7.45 per cent, whereas its two-year and three-year MCLR increased by 10 basis points to 7.70 per cent and 7.80 per cent, respectively.
Here are the tenor-wise SBI’s MCLR effective from July 15, 2022, as per the lender’s website:
Overnight: Old Rates — 7.05 per cent; New rate — 7.15 per cent
One Month: Old Rates — 7.05 per cent; New rate — 7.15 per cent
Three Month: Old Rates — 7.05 per cent; New rate — 7.15 per cent
Six Month: Old Rates — 7.35 per cent; New rate — 7.45 per cent
One Year: Old Rates — 7.40 per cent; New rate — 7.50 per cent
Two Year: Old Rates — 7.60 per cent; New rate — 7.70 per cent
Three Year: Old Rates — 7.70 per cent; New rate — 7.80 per cent
SBI has been increasing its MCLR on loans since April 2022. Earlier, SBI raised the marginal cost of lending rate by up to 20 basis points with effect from June 15, 2022. Apart from MCLR, the lender hiked its external benchmark-linked loan interest rates in June 2022. Its EBLR is 7.55%+CRP, while its RLLR is 7.15%+CRP.
Recently, HDFC Bank and ICICI Bank have also increased their MCLR rates. HDFC Bank hiked its increased its marginal cost of lending rate, or MCLR across all tenures; while ICICI Bank has risen its marginal cost of lending rate, or MCLR, by 20 basis points across tenures.
To control inflation, the Reserve Bank of India (RBI) in early June raised the key repo rate by 50 basis points (bps), which was the second hike within almost as month after the central bank’s Monetary Policy Committee increased 40 basis points in off-cycle policy review in May. The retail inflation in May stood at 7.04 per cent, which is higher than the RBI’s target limit of 2-6 per cent.
Following this, banks, including ICICI Bank, State Bank of India and HDFC Bank, have also increased their interest rates for both deposits as well as loans.
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