SBI hikes lending rate by 0.1% across tenures, EMIs to go up
NEW DELHI: The country’s largest lender State Bank of India has raised its marginal cost of funds based lending rate MCLR by 10 basis points or 0.1% across all tenures, a move that will lead to a rise in equated monthly instalments for borrowers.
This is the second hike in a month raising the cost by 0.2% with the two consecutive increases.
The revision follows an offcycle rate increase by the Reserve Bank of India earlier this month. The RBI hiked the repo rate, at which it lends short term money to banks, by 0.40% to 4.40%.
The lending rate revision by SBI is likely to be followed by other banks in the days to come.
With the increase, EMIs will go up for those borrowers who have availed loans on MCLR but not for those whose loans are linked to other benchmarks.
SBI’s External Benchmark based Lending Rate (EBLR) is 6.65%, while the Repo-Linked Lending Rate (RLLR) is 6.25% effective April 1.
Banks add Credit Risk Premium (CRP) over the EBLR and RLLR while giving any kind of loan, including housing and auto loans.
The revised MCLR is effective from May 15, according to the information posted on the SBI website.
With the revision, one-year MCLR has increased to 7.20% from 7.10% earlier.
An overnight, one-month and three-month MCLR rose by 10 basis points to 6.85%, whereas a six-month MCLR increased to 7.15%.
Most of the loans are linked to the one-year MCLR rate.
At the same time, two-year MCLR increased by 0.1% to 7.40%, while three-year MCLR rose to 7.50%.
Following the rate revision by the central bank, several banks have already raised interest rates and some more are expected to follow in the coming days.