State Bank of India, the country’s largest lender, has raised the marginal cost of the fund-based lending rate by 10 basis points, or 0.1 per cent, for all periods, a move that would lead to an increase in EMI for borrowers. This is the second increase in a month, with 0.2 per cent increase in costs, a two-fold increase.
The revision comes after the Reserve Bank raised its off-cycle rate earlier this month. The central bank has raised the repo rate – where it lends short-term money to banks – from 0.40 percent to 4.40 percent. The loan rate revision by SBI (State Bank of India) will be followed by other banks in the coming days.
With the increase, the EMI will increase for borrowers who have borrowed at MCLR (Marginal Cost of Fund Based Lending Rate), for those whose loans are not linked to other benchmarks. SBI’s External Benchmark Based Lending Rate (EBLR) is 6.65 per cent, while the repo-linked lending rate (RLLR) is 6.25 per cent effective from 1 April.
Banks add credit risk premium (CRP) on EBLR and RLLR when making any type of loan, including housing and auto loans. According to the information posted on the SBI website, the revised MCLR rate will be effective from May 15 With the correction, the one-year MCLR has increased from 7.10 percent to 7.20 percent
Overnight, the one-month and three-month MCLR rose 10 basis points to 6.85 percent, while the six-month MCLR rose 7.15 percent. Most loans are linked to a one-year MCLR rate.
At the same time, the two-year MCLR rose 0.1 percent to 7.40 percent, while the three-year MCLR rose 7.50 percent.
Following the rate revision by the RBI, several banks have already raised interest rates and are expected to follow suit in the coming days.