State Bank of India (SBI), the country’s largest bank, on Saturday increased its benchmark lending rates, or marginal cost of funds-based lending rate, by 20 basis points. As a result, home, auto and other personal loans will become costlier for customers as most of the retail loans are benchmarked against one-year MCLR.
Other banks are all set to hike the rates in the coming days.
SBI has increased the lending rate by 20 basis points across all tenors up to three years. The bank’s overnight and one-month rate now stands at 8.1 per cent as against 7.9 per cent. The MCLR for a one-year tenor rose to 8.45 per cent from 8.25 per cent earlier. The MCLR for a 3-year tenor increased to 8.65 per cent from 8.45 per cent. On August 1, 2017, the RBI had raised the interest rate by 25 bps for the second time in two months to contain inflation in an election year. The rate hike in June was the first time the benchmark lending rate was raised in over four years. This is now the first time since October 2013 that the central bank has raised the repo rate at two consecutive policy meetings.
On September 2, mortgage lender HDFC hiked rates on home loans by 20 basis points. Union Bank of India, Kotak Mahindra Bank and Karnataka Bank also increased their MCLR by 5-10 basis points in early August.