SBI hikes MCLR for various tenures for second time in nearly a month; check revised rates

State Bank of India previously hiked MCLR rates on June 14 this year.

SBI hikes MCLR for various tenures for second time in nearly a month; check revised rates
State Bank of India.

Public-sector lender State bank of India has hiked the Marginal Cost Of Funds Based Lending Rate (MCLR) rate for various tenors once again. The lender had previously increased MCLR exactly a month ago. With the latest hike in rates, overnight, one-month, and three-month MCLR has increased to 7.15% from 7.05%, while the MCLR on six-month tenure is up at 7.45% from 7.35% that was earlier. The one-year MCLR rate has been increased to 7.5% from 7.4%. The rate hikes by various banks were started in anticipation of a hawkish rate hike cycle by the Reserve Bank of India.

SBI’s new MCLR comes into effect from tomorrow, July 15. The rate for the Two-year tenure has been increased to 7.7% and that of the three-year tenure has been hiked to 7.8% by the State Bank of India. Under the MCLR lenders are required to declare the interest rate for various tenures every month.

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With the rise in MCLR by the State Bank of India, existing borrowers will have to dish out more for their EMI payments and new borrowers will have pay more for their loans from the lender. MCLR is the minimum interest rate for lender, below the same, banks are now allowed to hand out loans to their customers. However, it must be noted that actual lending rates are usually higher than the MCLR as banks take into consideration the risks involved with lending.

In recent months, lenders such as ICICI Bank, HDFC Bank, Canara Bank, Bank of Baroda, and Union Bank of India have hiked their MCLR. The move has been taken keeping in mind the interest rate hike cycle undertaken by the Reserve Bank of India’s Monetary Policy Committee (MPC). The MPC is expected to keep hiking interest rates into the next few policy meetings as it tries to tame inflation which stands at 7.01%, well above the 6% tolerance level of the Reserve bank of India.

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