India’s biggest public sector lender, State Bank of India, on Monday hiked the marginal cost of funds-based lending rate (MCLR) on loans with effect from August 15, i.e., today. The MCLR rate for overnight to three-month has increased to 7.35 per cent from 7.15 per cent, while six-month MCLR has risen to 7.65 per cent from 7.45 per cent.
Similarly, The MCLR rate for one year has gone up to 7.7 per cent, two-year to 7.9 per cent from 7.7 per cent and three years to 8 per cent from 7.8 per cent.
This comes a month after SBI increased the marginal cost of fund-based lending rates by ten basis points across various tenors.
The rate by SBI also comes days after the Reserve Bank of India this month increased the repo rate by 50 basis points, to 5.40 per cent, to tame inflation. The sharp hike in repo rate by the central bank has prompted many banks to increase the lending rates they charge on borrowings.
A week ago, HDFC Bank raised its MCLR by 5 – 10 basis points (bps) across loan tenors, with effect from August 8, while IDFC First Bank also revised its lending rate upwards by 5-15 bps across loan tenors.
Introduced in April 2016, MCLR is a formula used by banks to calculate their cost of funding and then do monthly reviews of their offerings.
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