State Bank of India (SBI), the largest lender in the country, has announced an increase in its benchmark marginal cost of lending rate (MCLR) by 5 to 10 basis points, effective 15 July.
This decision indicates a potential rise in interest rates for loans tied to the MCLR, impacting both corporate and retail borrowers who rely on this rate for their financing needs.
The bank adjusted the one-month MCLR for loans up by 5 basis points to 8.35%, while the three-month MCLR increased by 10 basis points to 8.40%.
The bank raised the rates for six-month, one-year, and two-year loans by 10 basis points each, now at 8.75%, 8.85%, and 8.95%, respectively.
Additionally, the three-year MCLR has seen a smaller increase of 5 basis points, bringing it to 9%.
This marks the second consecutive rate hike by SBI, following a similar increase of 10 basis points in June.
The MCLR sets the minimum interest rate banks charge for loans, primarily impacting corporate borrowing, while retail loans typically link to the repo rate, which the Reserve Bank of India (RBI) has kept unchanged since February 2023.
As a leading player in the banking sector, SBI’s decisions often influence other financial institutions.
Analysts expect that this latest hike may prompt other banks to adjust their MCLR rates accordingly, potentially leading to higher loan costs across the board.
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