SBI hikes BPLR by 70 bps; keeps MCLR unchanged | The Financial Express

SBI hikes BPLR by 70 bps; keeps MCLR unchanged

The MCLR, which is linked to banks’ internal cost of funding, is reset by lenders every month. SBI had raised MCLR by 20 bps in August. The bank resets EBLR loans on the first day of the month, following the month in which the rate hike was announced, a majority which are repo-linked loans.

SBI hikes BPLR by 70 bps; keeps MCLR unchanged
The central bank has raised policy rates by 140 bps since June.

The country’s largest lender, State Bank of India (SBI), on Thursday increased its benchmark prime lending rate (BPLR) by 70 basis points (bps) to 13.45%, as per information on the bank’s website.

BPLR is the internal benchmark rate used to determine interest rates on loans, which the bank revises on a quarterly basis. Around 75% of the bank’s loan book is linked to marginal cost of funds based lending rate (MCLR), external benchmark lending rate (EBLR) and treasury bills, of which 41% is linked to MCLR and 23% to EBLR.

The bank has kept the MCLR unchanged for September; it remains in the range of 7.35-8% with one-year MCLR at 7.70%. The bank has not raised its cost-based lending rates for the first time in the past five months. It had been consistently raising its MCLR after the Reserve Bank of India hiked the repo rate. The central bank has raised policy rates by 140 bps since June.

Also Read: Bank of Baroda hikes FD rates by up to 20bps

The MCLR, which is linked to banks’ internal cost of funding, is reset by lenders every month. SBI had raised MCLR by 20 bps in August. The bank resets EBLR loans on the first day of the month, following the month in which the rate hike was announced, a majority which are repo-linked loans.

Economists are expecting the RBI to increase the repo rate by 35-50 bps after headline inflation rose to 7% in August, after showing signs of easing in the previous months. The central bank’s monetary policy committee is scheduled to meet from September 28-30 to decide on the policy rates.

Banks’ credit growth is increasing despite the rising rate cycle, with industry level loan growth touching almost 16% in the fortnight ended August 26. SBI said the bank is witnessing good demand from the retail and SME segments and has not seen signs of demand tapering off. On the corporate side, the bank is expecting growth of Rs 2.5-3 trillion in FY23, with overall loan book to grow by 15%, Dinesh Khara, SBI chairman said in a recent interview.

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