What TV doesn't, print can't; we deliver.
What TV doesn't, print can't; we deliver.
NEW DELHI: The State Bank of India (SBI), the country’s largest lender, has increased its marginal cost of funds-based lending rate (MCLR) by 10 basis points (0.1%) across all tenures, effective from June 15.
MCLR signifies the minimum interest rate below which banks cannot lend and reflects trends in their cost of borrowing.
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This adjustment will lead to higher equated monthly installments (EMIs) for borrowers whose loans are tied to the MCLR. Most retail loans, such as home and auto loans, are linked to this rate.
Under the revised rates, the one-year MCLR rises to 8.75% from 8.65%, the overnight MCLR to 8.10% from 8.00%, and the one-month and three-month MCLR both to 8.30% from 8.20%. The six-month MCLR now stands at 8.65%, up from 8.55%. Additionally, the two-year MCLR has been increased to 8.85% from 8.75%, and the three-year MCLR is now 8.95%, up from 8.85%.
Borrowers with MCLR-linked loans will experience these adjustments based on their loan reset periods, after which the new rates will apply. However, loans linked to external benchmarks such as the RBI’s repo rate or Treasury Bill yield remain unaffected by this MCLR hike. From October 1, 2019, all banks including SBI have to lend only at an interest rate linked to an external benchmark such as RBI’s repo rate or Treasury Bill yield As a result, monetary policy transmission by banks has gained traction.
These adjustments by SBI are part of broader moves by banks to align lending rates with changes in the monetary policy landscape. The Reserve Bank of India’s (RBI) recent decision to maintain the repo rate at 6.5% for the eighth consecutive time. The aim of these changes by banks are to enhance the transmission of policy rates to consumers.
