EMIs on home, car loans set to rise as SBI raises lending rates to 8.15% from 7.95%; first hike since April 2016

State Bank of India, the country’s top lender by assets, on Thursday raised marginal cost-based lending rates (MCLR) across most maturities, effective immediately.SBI, which accounts for more than a fifth of India's banking assets, raised the key 1-year MCLR to 8.15 percent from 7.95 percent, according to a notification on Thursday.It is the first hike in the 1-year MCLR since the inception of a new lending rate system in April 2016, according to Thomson Reuters data.Banks are raising interest rates even though the central bank is leaving its rates unchanged, as risks such as surging bond yields and more provisioning requirements erode their profit.[caption id="attachment_4370853" align="alignleft" width="380"] Representational image. Reuters.[/caption]On Wednesday, SBI raised interest rates on domestic bulk term deposits across most maturities by up to 0.75 percent with immediate effect. The pricing revision came after three consecutive revisions in the rates by the lender on bulk term-deposits in the past three months.Under the present loan pricing mechanism that is based on the marginal cost of funds-based lending rates (MCLR), any upward revision in the cost of funds, including deposits pricing automatically leads to a pricing revision in loans.

Tenure-wise MCLR effective from 1st March, 2018 will be as under:
Tenure	Existing MCLR (In %)	Revised MCLR (In %)
Over night	7.70	7.80
One Month	7.80	7.80
Three Month	7.85	7.85
Six Month	7.90	8.00
One Year	7.95	8.15
Two Years	8.05	8.25
Three Years	8.10	8.35

For retail deposits, below Rs 1 crore, rates were increased by up to 0.50 percent, while for deposits maturing in one year to less than two years, the pricing was raised by 0.15 percent to 6.40 percent from 6.25 percent earlier.All the new rates come into force immediately, the bank said in a statement.