On December 15, the State Bank of India (SBI) announced an upward revision in its marginal cost of funds-based lending rate (MCLR) on select tenures, leading to an increase of 5-10 basis points. This move implies that certain consumer loans, such as auto or home loans, will experience a rise in interest rates for borrowers.
The decision to raise rates by SBI follows the monetary policy committee’s (MPC) resolution on December 8, 2023, led by RBI Governor Shaktikanta Das, where the repo rate was maintained at 6.5% for the fifth consecutive time.
**Impact on Borrowers:**
The increase in MCLR will result in more expensive equated monthly instalments (EMIs) for borrowers. Individuals currently applying for loans will be subjected to the new, higher interest rate. Furthermore, existing loan recipients will have to pay their upcoming instalments at this elevated rate. It’s crucial to note that MCLR-based loans typically have a reset period, after which the rates are adjusted for the borrower.
**Revised MCLR of SBI:**
Here is an overview of the revised MCLR rates of SBI:
– Overnight: 8.00% (unchanged)
– One Month: 8.20%
– Three Months: 8.20%
– Six Months: 8.55%
– One Year: 8.65%
– Two Years: 8.75%
– Three Years: 8.85%
These revised rates have come into effect starting from the announcement date. It’s important to highlight that this adjustment impacts various tenures, with the exception of the overnight tenure, which remains unchanged at 8.00%. Borrowers are advised to consider these rate changes when evaluating or managing their loans with SBI.
