SBI Hikes MCLR: India's Biggest PSU Bank Raises Lending Rates For 2nd Time In 2 Months; Check Rates

The State Bank of India (SBI) has raised its benchmark Marginal Cost of Funds Based Lending Rate (MCLR) by 5-10 basis points, effective Monday, 15 July 2024. This decision will likely result in higher interest rates on loans and increased Equated Monthly Installments (EMIs) for customers.

MCLR Hike Breakdown

SBI, the largest bank in India, has increased the MCLR across various loan tenures. For 1-year loans, the MCLR has been raised by 10 basis points, bringing it to 8.85%. The MCLR for 3-month, 6-month, and 2-year loan tenures have also been hiked by 10 basis points each, setting the new rates at 8.4%, 8.75%, and 8.95% respectively. These changes are detailed as follows:

Overnight Loans: MCLR hiked by 10 bps to 8.10%
One-Month Loans: MCLR hiked by 10 bps to 8.35%
Three-Month Loans: MCLR hiked by 10 bps to 8.40%
Six-Month Loans: MCLR hiked by 10 bps to 8.75%
One-Year Loans: MCLR hiked by 10 bps to 8.85%
Two-Year Loans: MCLR hiked by 10 bps to 8.95%
Three-Year Loans: MCLR hiked by 10 bps to 9.00%

Impact on Borrowers

The hike in MCLR is significant because it directly influences the interest rates on various loans, including home loans, auto loans, and personal loans. With the MCLR increase, borrowers can expect their EMIs to rise proportionately. For example, a borrower with a home loan linked to the 1-year MCLR will see their interest rate move from 8.75% to 8.85%, thereby increasing their monthly repayments.

This is the second time in two months that SBI has increased its MCLR. In mid-June, the bank had also raised the MCLR by 10 basis points, setting the benchmark rate for 1-year loans at 8.75%.

The MCLR is an internal benchmark used by banks to determine the minimum interest rate at which they can lend. It is influenced by various factors, including the cost of funds, operating expenses, and the bank's profit margin. The recent hikes suggest that SBI is adjusting to higher funding costs, which could be driven by inflationary pressures and changes in the Reserve Bank of India's (RBI) monetary policy stance.