The State Bank of India (SBI), the largest state-owned bank in India, has announced an increase in its lending rates by 10 basis points across tenors, effective from August 15, 2024. This marks the third consecutive month that the bank has raised its rates, indicating a trend of tightening credit conditions. The rate hike will impact the Marginal Cost of Funds Based Lending Rate (MCLR), which is the benchmark used by the bank to set interest rates on various types of loans, including home, auto, and personal loans. The MCLR is a critical reference point for borrowers as it directly affects the cost of borrowing.
The MCLR has seen an upward trend, signalling an increase in borrowing costs. Introduced in April 2016 as a replacement for the base rate system, the MCLR is used as a benchmark for setting lending rates unless specific exceptions are approved by the Reserve Bank of India (RBI). As MCLR rates rise, consumers across different tenures will face higher loan repayments, making borrowing more expensive.SBI's decision to increase rates comes amid a broader trend of rising interest rates in the banking sector, influenced by prevailing economic conditions and the Reserve Bank of India's (RBI) monetary policy stance. The rate adjustment is expected to affect both new and existing borrowers, who may see an increase in their loan EMIs.
Check SBI’s tenor-wise MCLR effective from August 15
| TENOR | EXISTING MCLR | REVISED MCLR |
| Overnight | 8.10% | 8.20% |
| One Month | 8.35% | 8.45% |
| Three Month | 8.40% | 8.50% |
| Six Month | 8.75% | 8.85% |
| One Year | 8.85% | 8.95% |
| Two Years | 8.95% | 9.05% |
| Three Years | 9.00% | 9.10% |
Rate hikes amid steady repo rate
Following similar actions by other public sector banks, several major banks have recently increased their lending rates. Bank of Baroda and Canara Bank implemented their rate hikes effective from August 12, 2024, while UCO Bank made adjustments from August 10, 2024. Despite these hikes, the Reserve Bank of India (RBI) held its benchmark repo rate steady at 6.5 per cent during the Monetary Policy Committee (MPC) meeting on August 8. The RBI also maintained the standing deposit facility (SDF) rate at 6.25 per cent, the marginal standing facility (MSF) rate and the bank rate at 6.75 per cent.
