State Bank of India has raised its marginal cost of funds-based lending rate by 10 basis points, or 0.1 percentage points, across all tenures, a move that will lead to an increase in equated monthly instalments for borrowers.
The revision follows an off-cycle repo rate hike by the Reserve Bank of India earlier this month. The central bank hiked the repo rate -- at which it lends short term money to banks -- by 40 basis points to 4.40%. The MCLR revision by SBI is likely to be followed by other banks in the days to come.
With the increase, EMIs will go up for those borrowers who have availed loans on MCLR, not for those whose loans are linked to other benchmarks. SBI's external benchmark-based lending rate is 6.65%, while the repo-linked lending rate is 6.25%, effective April 1.
Banks add credit risk premium over the EBLR and RLLR while giving any kind of loan, including housing and auto loans.
The revised MCLR rate is effective from May 15, according to SBI website. With the revision, the one-year MCLR has increased to 7.20% from 7.10% earlier.
The overnight, one-month and three-month MCLR rose by 10 basis points to 6.85%, whereas the six-month MCLR increased to 7.15%. Most of the loans are linked to the one-year MCLR rate. At the same time, two-year MCLR increased by 0.1% to 7.40%, while three-year MCLR rose to 7.50%.
Following the rate revision by the RBI, several banks have already raised interest rates and some more are expected to follow in the coming days.
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