India’s largest public sector bank State Bank of India (SBI) has increased one-year marginal cost of funds based lending rate (MCLR). As per the hike SBI new MCLR is 8.15 per cent which is 20 basis points more as compared to earlier 7.95 per cent. SBI new rate will be applicable from immediate effect. Now EMIs for home loan borrowers are likely to go up.
Taking similar kinds of steps, other two banks PNB (Punjab National Bank) and country’s second-largest private sector lender ICICI Bank have also increased their MCLR for one year. According to reports, PNB hiked one-year MCLR to 8.3 per cent from 8.15 per cent. ICICI bank raised MCLR from 8.2 per cent to 8.3 per cent.
This is for the first that SBI has increased benchmark lending rate since MCLR system was introduced in April 2016. SBI had earlier decreased marginal cost lending rates by 5 basis points in November 2018 and made it to 7.95%. Below are SBI’s MCLR based on tenors:
1. For over night: MCLR now is 7.80 (Earlier it was 7.70)
2. For one-month and three-month: No change
3. Six month tenor: 8.0% from earlier 7.90
4. For two-year: 8.25 per
5. Three-year MCLR: 8.35 per cent
What is Marginal Cost of Funds based Lending Rate (MCLR)?
MCLR is the methodology introduced by RBI. It is the minimum interest rate of a bank below which it cannot lend money to its customer, excluding some special cases allowed by the RBI. It can be referred as internal benchmark or reference rate for the bank. MCLR in actual is the method by which the minimum interest rate for loans is determined by a bank.