SBI’s MCLR-linked loans become more expensive by 10 basis points

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The country’s largest lender, the State Bank of India (SBI), raised its lending rate based on the marginal cost of funds (MCLR) by 10 basis points or 0.1% across the board from 15 may.

With this, interest rates on MCLR-indexed loans will increase. And loans to individuals, MSMEs and businesses will become more expensive when they are rolled over. The interest cost for businesses when obtaining new loans will also increase.

Also last month, the bank increased its MCLR by 10 basis points.

The rise in MCLR comes amid the RBI’s Monetary Policy Committee (MPC) raising the repo rate from 4% to 4.40% earlier this month.

All sanctioned and renewed variable rate rupee loans with effect from 1 April 2016 have been priced with reference to the MCLR, which will be the internal benchmark for these purposes.

In an effort to improve the scale and pace of monetary transmission at actual lending rates, RBI had required banks to link all new variable rate personal or retail loans (housing, auto, etc.) and micro and small enterprise variable rate loans to external loans. benchmarks, including repo rate, 3-month/6-month treasury bill yield or any other benchmark market interest rate published by Financial Benchmarks India Private Ltd (FBIL), from 1 October 2019 .

In addition, the central bank has ordered all banks to link all new variable rate loans to mid-sized businesses to external benchmarks from April 1, 2020.

Published on

May 16, 2022

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