SBI hikes lending rate: How it'll impact your loan EMIs
State Bank of India (SBI) has announced an increase in its interest rates on loans by 10 basis points across all tenures. This change, effective from August 15, marks the bank's third consecutive month of rate hikes. The Marginal Cost of Funds Based Lending Rate (MCLR) for various tenures has also been revised. While most retail loans are tied to the MCLR rate, the latest increase means borrowers will see a rise in their EMIs as the interest rates adjust.
MCLR sees significant increase
Since June, SBI has raised its MCLR by up to 30 basis points (bps) in some tenures. The three-year tenor MCLR has now reached 9.10%, up from the previous rate of 9%. Additionally, the overnight MCLR stands at 8.20%, marking an increase from its earlier rate of 8.10%. Likewise, the rate for one-month, two-month, three months, six months, one-year, and two-year MCLR have also been revised. This trend indicates rising borrowing costs for consumers across various loan tenures.
Other public sector banks follow suit
SBI's rate hike is part of a broader trend among public sector banks. Institutions like Canara Bank, Bank of Baroda, and UCO Bank recently revised their lending rates. The changes by Bank of Baroda and Canara Bank were effective from August 12, while UCO Bank implemented new rates on August 10. These adjustments come after the Reserve Bank of India (RBI) decided to maintain the benchmark repo rate at 6.5% in its Monetary Policy Committee (MPC) meeting on August 8.
RBI retains key rates, MCLR remains benchmark
In addition to the repo rate, the RBI also kept the standing deposit facility (SDF) rate at 6.25% and both the marginal standing facility (MSF) rate and bank rate at 6.75%. The MCLR, introduced in April 2016 as a replacement for the base rate system, serves as a minimum interest rate below which banks cannot lend except in some cases approved by RBI. This continuous hike in MCLR indicates an upward trend in borrowing costs across various loan tenures.
