Quixplained: What the hike in MCLR means for you

State Bank of India (SBI), India’s largest commercial bank, on Monday, raised the marginal cost of funds-based lending rates (MCLR) for the first time in three years, signalling that the soft rates regime that has prevailed since 2019 may be over.

Why is there a hike in MCLR? How does it affect you? What should be done? Take a look:

 

MCLR is the lowest interest rate a bank offers a customer. The hike in MCLR is in line with RBI shifting its focus.

In Premium | What the increase in MCLR means for your loan

Even those with existing home loans will see a hike in interest rate. The soft rates regime that has prevailed since 2019 may be over. Those with home loans can use part of savings to repay the loans.