State Bank of India on Tuesday increased the marginal cost of funds-based lending rates (MCLR) by 10-15 basis points (bps) on some tenures. The bank has increased one-year MCLR by 10 bps to 8.05%. The lending rates for some shorter-term maturities have been increased by 15 bps and are in the range of 7.60-8.05%, while the rates for loans maturing in two and three years are 8.25% and 8.35%, respectively, according to information on its website.
The lender has increased the MCLR by 85 bps since June. While SBI had kept the MCLR unchanged for September, it effected a steeper increase of 25 bps in the following month, after the Reserve Bank of India (RBI) hiked repo rate by 50 bps in the monetary policy on September 30. The bank has 75% of its loan book linked to MCLR and external benchmark lending rates (EBLR) – 41% is MCLR linked, the remaining is EBLR linked. The fixed rate linked book is about 21%. Majority of the MCLR book is linked to 6-month tenure rate.
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In comparison, the bank increased the interest rate by 50 bps on term deposits maturing between one and two years to 6.10% in October. For bulk deposits maturing in the same bracket, the bank is offering interest rate of 6%. The bank has raised the rates four times since May, and it has been as high as 80 bps in the one-two-year segment. Overall, lenders are increasing their deposit rates to support the credit, which is growing at a faster pace compared to deposits. SBI witnessed a 20% y-o-y growth in gross advances in Q2FY23 while deposit growth was at 10%.
The bank is raising the interest rates on deposits selectively, but it is doing so in sync with market expectations, Dinesh Khara, chairman of SBI, said earlier, adding that the bank is confident of supporting the credit growth by raising more deposits.