The country’s largest lender State Bank of India (SBI) has raised its marginal cost of funds based lending rate (MCLR) by 10 basis points or 0.1 per cent across the board with effect from May 15.

With this, interest rates on loans benchmarked to MCLR will go up. And, retail, MSME and corporate loans will become costlier when they come up for renewal. Interest cost for corporates while getting new loans sanctioned will also go up.

Last month, too, the bank had increased its MCLR by 10 basis points.

The MCLR hike comes in the backdrop of increase in the policy repo rate by the Monetary Policy Committee (MPC) of RBI from 4 per cent to 4.40 per cent earlier this month.

SBI’s one-year MCLR is now at 7.20 per cent against 7.10 per cent earlier.

All floating rate rupee loans sanctioned and renewed with effect April 1, 2016 were priced with reference to MCLR, which will be the internal benchmark for such purposes.

In a bid to improve the magnitude and pace of monetary transmission to actual lending rates, RBI had asked banks to link all new floating rate personal or retail loans (housing, auto, etc.) and floating rate loans to micro and small enterprises to external benchmarks, including repo rate, 3-months/6-months Treasury Bill yield or any other benchmark market interest rate published by the Financial Benchmarks India Private Ltd (FBIL), with effect from October 01, 2019 .

Further, the central bank directed all banks to link all new floating rate loans to the medium enterprises to external benchmarks with effect from April 01, 2020.

Related Topics
comment COMMENT NOW