SBI raises MCLR by 10-15 bps on some tenures; details here

Marginal Cost of Funds Based Lending Rate (MCLR) is used as an internal benchmark rate by the banks when they are offering loans at a fair and open interest rate. The State Bank of India (SBI) hiked the MCLR by 10-15 basis points (bps) yesterday, 15 November. As per The Economic Times, the primary cause of raising these rates is inflation. In order to contain inflation, the Reserve Bank of India has been increasing the repo rate since May 2022. Until the inflation level reaches the RBI’s comfort zone, which is 2-6 per cent, banks will be prompted to hike the interest rates.

Know the rates

The bank has hiked MCLR for several short-term maturities by 10 to 15 basis points. The MCLR for one-month and three-month tenures has been hiked from 7.6 per cent to 7.75 per cent. The SBI has raised MCLR for six months and one-year tenures by 15 bps to 8.05 per cent. Now, the rate for loans maturing in two years is 8.25 per cent and for the maturity period of three years, it is 8.35 per cent. The bank has raised MCLR by 85 bps since the month of June.

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What is MCLR?

MCLR refers to the basic minimum rate at which the banks offer loans. In order to determine the interest rates of various types of loans, RBI introduced MCLR in 2016.

MCLR rate hike cycle

Some other banks have been hiking their MCLR as well. For instance, the Bank of Baroda recently increased its MCLR between 10-15 bps. The new rates came into effect on 12 November. Both public and private sector banks have been hiking their lending and deposit rates because of the RBI’s repo rate hike cycle.

The three-month and one-month MCLR have been hiked by 10 bps. The three-month MCLR is now 7.75 per cent, and the one-month MCLR stands at 7.7 per cent.

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