State Bank of India (SBI) has hiked the marginal cost of funds-based lending rate (MCLR) for the second time in just over a month, according to information published on its website. MCLR refers to minimum lending rate below which a bank is not permitted to lend, except in certain cases.
The country’s largest lender in terms of the size of customer base, SBI, has raised the MCLR by up to 10 basis points (BPS) for various tenors, effective July 15, 2024. Exactly a month ago on June 15, the PSU lender had hiked the MCLR by almost same margin.
Which loans are linked with MCLR?
Banks link almost all loans with a floating interest rate with the MCLR. Some lenders also link their auto loans and educational loans with MCLR.
Also read: No respite for loan borrowers! Home, car loan EMIs to rise further as SBI hikes MCLR – Details
Impact of MCLR hike on various loan tenors
The bank has kept the MCLR for overnight lending unchanged at 8.10%. MCLR on one-month tenure has been raised by 5 bps to 8.35% from 8.30% and on three-month tenure has been revised to 8.40% from 8.30%. While MCLR on six-month tenure is revised to 8.75% from the earlier 8.65%, as per the SBI website. The bank has raised the MCLR on one-year tenure to 8.85% from 8.75%. SBI’s most loans are linked to one-year MCLR rate.
On two-year tenure, MCLR rate has been fixed at 8.95% as against 8.85% charged earlier. Its MCLR for three-year tenure has gone up by 5 basis points to 9%.
Marginal Cost Of Funds Based Lending Rate (MCLR) w.e.f. July 15, 2024
Tenor-wise MCLR effective from July 2024 is as under:
| Tenor | Existing MCLR (In %) | Revised MCLR (In %) |
| Over night | 8.10% | 8.10% |
| One Month | 8.30% | 8.35% |
| Three Months | 8.30% | 8.40% |
| Six Months | 8.65% | 8.75% |
| One Year | 8.75% | 8.85% |
| Two Years | 8.85% | 8.95% |
| Three Years | 8.95% | 9% |
Source: SBI website
SBI has hiked the lending rates twice in a month’s time despite the Reserve Bank keeping the repo rate, the rate at which it lends to commercial banks in the country, unchanged in its June monetary policy review. The last time the RBI hiked the interest rate was in February 2023. In the last 8 monetary policy reviews, the apex bank has maintained the status quo on its key interest rates.
How is MCLR linked with RBI repo rate?
All commercial banks in India reset their MCLR rates based on RBI repo rate and cost of funds.