New Delhi [India], July 15 (ANI): The State Bank of India (SBI) on Monday announced an increase in its Marginal Cost of Funds Based Lending Rate (MCLR) by 5-10 basis points for most tenors.
The MCLR represents the minimum rate at which a bank can lend money and is a crucial factor in determining loan interest rates. This adjustment by SBI is significant as it reflects changes in the cost of funds and overall market conditions.
The Reserve Bank of India (RBI) implemented the MCLR system in April 2016, replacing the base rate system to enhance transparency in the interest rate-setting process. This system aims to ensure that the benefits of reduced lending rates are passed on to borrowers more effectively.
SBI has revised the lending rates for tenors exceeding one night. Specifically, the lending rate for one month has been adjusted from 8.30 percent to 8.35 percent.
For three months, the rate has increased from 8.30 percent to 8.40 percent. The six-month lending rate has been revised to 8.75 percent, while the one-year rate is now set at 8.85 percent.
Notably, the lending rate for three years tenor has seen an increment of 5 basis points, bringing it to 9 percent.
These changes in lending rates are part of the bank’s routine review and adjustment of interest rates based on its marginal cost of funds. The increase indicates a slight rise in the bank’s cost of borrowing and operational expenses, which is subsequently passed on to borrowers.
The adjustment in SBI’s MCLR is likely to influence other banks as well. Following SBI’s lead, other banks may also increase their lending rates to maintain competitive parity and reflect their own cost structures. This cascading effect can impact borrowers across the banking sector, leading to higher interest rates on various types of loans, including personal, home, and auto loans. (ANI)
