New Delhi: State Bank of India (SBI), India’s largest state-run bank has announced a hike in loan interest rates by 10 basis points across all tenors. This change, effective from August 15, 2024 will affect the Marginal Cost of Funds Based Lending Rate (MCLR), leading to a slight increase in borrowing costs for SBI customers.
SBI’s latest hike in its Marginal Cost of Funds Based Lending Rate (MCLR) comes shortly after the RBI kept the repo rate steady at 6.5 per cent. This marks the third month in a row that SBI has increased its MCLR. Since June 2024, the public sector bank has raised its MCLR by up to 30 basis points (bps) across some loan tenors.
How Will This Affect Your Loan EMIs?
With SBI’s updated MCLR rates, the interest for a three-year loan tenor will now be 9.1 per cent, up from 9.0 per cent. The overnight MCLR will increase to 8.2 per cent from 8.1 per cent. This adjustment may lead to a small rise in your loan EMIs.
The revised rate for the six-month MCLR is now 8.85 per cent, up from the previous 8.75 per cent. For one-year loans, the MCLR has increased to 8.95 per cent. Further, the MCLR for loans with a two-year tenure is now 9.05 per cent.
What is MCLR?
MCLR, or Marginal Cost of Funds Based Lending Rate is the lowest interest rate a bank can offer except in specific cases approved by the Reserve Bank of India (RBI). Introduced in April 2016, MCLR replaced the old base rate system as the standard for setting lending rates.
Previously, other public sector banks like Bank of Baroda, Canara Bank, and UCO Bank raised their MCLR or lending rates for various tenures which led to higher costs for consumer loans. Bank of Baroda and Canara Bank updated their MCLR starting August 12, while UCO Bank raised its lending rates for certain tenures, effective August 10, 2024.
