The State Bank of India (SBI) on Friday announced an increase in the marginal cost of MCLR by 5-10 basis points for select tenors. This means that the EMI of home loans, car loans, and personal loan will increase for the common people. Loans, such as auto or home loans, will become more expensive for borrowers. The increase in the marginal cost of lending rate (MCLR) of the country's leading bank is now between 8 per cent and 8.85 per cent. The new rates have come into effect from December 15.
Other banks will also make loans expensive
The overnight MCLR rate has been set at 8 per cent, while the rates for one-month and three-month tenors have been increased to 8.20 per cent from 8.15 per cent. SBI is the leading bank in the banking sector. Therefore, there is a possibility that other banks will also follow suit and may increase interest rates.
Impact on the loan takers
The increase in MCLR will increase the monthly instalments (EMIs) of all types of loans. Customers who are currently applying for a loan will get the loan at expensive interest rates. Additionally, customers who have already taken a loan will have to pay their future instalments at this increased rate. However, it is important to note that MCLR-based loans have a reset period, after which the rates are revised for the borrower.
