The SBI move follows an out-of-cycle rate hike by the Reserve Bank of India, which raised the repo rate by 0.40% to 4.40%.
The SBI move follows an out-of-cycle rate hike by the Reserve Bank of India, which raised the repo rate by 0.40% to 4.40%.
The country’s largest lender, the State Bank of India, has raised its marginal cost lending rate by 10 basis points, or 0.1%, for all maturities, a move that will push up PMIs for borrowers.
This is the second increase in a month increasing the cost by 0.2% with the two consecutive increases.
The revision follows an off-cycle rate hike by the Reserve Bank earlier this month. The central bank increased the repo rate – at which it lends money to banks for the short term – by 0.40% to 4.40%.
Other banks are likely to follow the interest rate revision by the SBI (State Bank of India) in the coming days.
With the increase, EMIs rise for those borrowers who have taken out loans at MCLR (Marginal Cost of Funds Based Lending Rate), not for those whose loans are linked to other benchmarks.
SBI’s external benchmark lending rate (EBLR) is 6.65%, while its repo-linked lending rate (RLLR) is 6.25% effective April 1.
Banks add credit risk premiums (CRP) via EBLR and RLLR while originating any type of loan, including home and auto loans.
The revised MCLR rate is effective May 15, according to information published on the SBI website.
With the revision, the one-year MCLR has increased to 7.20% from the previous 7.10%.
An overnight, one-month and three-month MCLR rose 10 basis points to 6.85%, while a six-month MCLR rose to 7.15%.
Most loans are compounded at the one-year MCLR interest rate.
At the same time, the two-year MCLR rose 0.1% to 7.40%, while the three-year MCLR rose to 7.50%.
Several banks have already raised interest rates after the RBI’s interest rate revision and more are likely to follow in the coming days.
