SBI Loan rate update:
State Bank of India (SBI) has increased the marginal cost of the fund-based lending rate (MCLR) by 10 basis points (bps) across all tenures. This hike follows the Reserve Bank of India (RBI) maintaining the key policy rate. Other lenders are likely to follow suit, making loans more expensive for borrowers.
As a result of the revision, SBI‘s one-year MCLR has risen to 8.75 percent from 8.65 percent. The overnight MCLR is now 8.1 percent, up from 8 percent. Both the one-month and three-month MCLR have been adjusted to 8.3 percent from the previous 8.2 percent.
The revised MCLR for two-year and three-year tenures are now 8.85 percent and 8.95 percent, respectively. These new rates are effective starting today.
Last week, the RBI’s Monetary Policy Committee (MPC) kept the repo rate, the key policy rate, unchanged at 6.5 percent due to concerns over rising food inflation. The MCLR, introduced on April 1, 2016, is the minimum interest rate below which banks cannot lend and reflects trends in banks’ borrowing costs.
In 2019, the RBI introduced the external benchmark linked rate (EBLR), tied to the repo rate, to accelerate monetary policy transmission. Currently, all retail loans are linked to the EBLR. Any changes in the repo rate are immediately reflected in loans linked to the EBLR, whereas banks review interest rates under the MCLR regime monthly on a pre-announced date.
