Mumbai: Largest public sector bank in the country, State Bank of India (SBI) increased its marginal cost of funds-based lending rate (MCLR). The MCLR is hiked by 25 basis points (bps) across all tenures. Thus, the Equated Monthly Installments (EMIs) of home, auto, and personal loans will go up.
The lender hiked MCLR to 7.60% for overnight, one-month, and three-month tenures. The lending rate for six-month tenure has been raised from 7.65% to 7.90%. The one-year rate is hiked to 7.95%, whereas the MCLR for two-year tenure has risen from 7.90 per cent to 8.15%. The MCLR for three-year tenure has been hiked to 8.25%.
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MCLR is the minimum rate of interest banks are allowed to give out loans to its customers. It is a benchmark interest rate and it dictates the lower limit of the interest rate for a loan. It was first introduced in April 2016. Each bank calculates its MCLR by taking into account several factors such as its incremental cost of raising funds (say, via deposits) and operating expenses, among others. All existing floating-rate bank loans are linked to the MCLR or the external benchmark-based lending rate or the base rate.
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