MUMBAI: India’s largest state-run lender, the State Bank of India (SBI), has increased its marginal cost of lending rate (MCLR) by 10 basis points (bps) across all tenors, effective August 15. This marks the third consecutive month of MCLR hikes by SBI, following the RBI’s decision to keep the repo rate unchanged at 6.5 percent. Since June 2024, SBI has raised its MCLR by up to 30 bps in some tenors.
Borrowers to pay higher interest rates
A basis point is one-hundredth of a percentage point, while tenor refers to the duration of a loan. MCLR is the minimum interest rate below which banks cannot lend, except in certain RBI-approved cases. An increase in MCLR results in higher interest rates and EMIs for borrowers.
SBI’s revised MCLR rates are as follows: the three-year tenor MCLR is now 9.1 per cent, up from 9 per cent; overnight MCLR is 8.2 per cent, up from 8.1 per cent; six-month MCLR is 8.85 per cent, up from 8.75 per cent; one-year MCLR is 8.95 per cent; and two-year MCLR is now 9.05 per cent.
Other banks follow suit
Other PSU banks, including Bank of Baroda, Canara Bank, and UCO Bank, have also raised their MCLR or lending rates for various tenors, leading to higher costs for consumer loans. Bank of Baroda and Canara Bank adjusted their MCLR rates from August 12, while UCO Bank implemented changes for specific tenors starting August 10, 2024.
