Banks hike MCLRs, repo-linked lending rates post RBI rate action

Following a hike in repo rate by the Reserve Bank of India on September 30 by 50 basis points to 5.90%, banks raised their repo-linked lending rates by a similar margin. Gradually, they also raised the marginal cost of funds based lending rates.

The country’s largest lender

(SBI) has revised the MCLR for the benchmark one-year tenor to 7.95%, up by 25 basis points from previous rate, which came to effect from October 15, 2022.

The one-year tenor MCLR is the rate against which most of the consumer loans are tied to.

SBI has also raised the two- and three-year tenor MCLRs to 8.15% and 8.25% respectively, as against 7.9% and 8%. The overnight, one-, three- and six-month rates have been raised in the range of 7.60-7.90%.

Kotak Mahindra Bank said the MCLR for various tenors has been set in the range of 7.70-8.95% with effect from October 16, 2022. Its revised one-year MCLR rate is 8.75%. While south-based Federal Bank said its one-year MCLR on loans and advances has been revised to 8.70% with effect from October 16.

, , , , are among the lenders which have already raised their MCLR rates following RBI rate action.

The hike in MCLR rates comes in addition to hike in repo rate linked lending rates by a host of lenders, including SBI, ICICI Bank, Punjab National Bank, Bank of India, and mortgage lenders as soon as RBI increased repo -the rate at which it lends short term money to banks – on September 30.

last revised its MCLR from September 17, 2022.

From October 1, 2019, all banks migrated to an interest rate linked to an external benchmark such as RBI’s repo rate or Treasury Bill yield for a better transmission of rate revisions.