NEW DELHI: State Bank of India (SBI) on Thursday increased the marginal cost-based lending rates (MCLR) across various maturities, effective immediately. It is the first rate hike in the 1-year MCLR since the inception of a new lending rate system in April 2016, according to Thomson Reuters data.
The rise in lending rates generally hints that EMIs (equated monthly instalments) will go up. SBI, which accounts for more than a fifth of India’s banking assets, raised the key 1-year MCLR to 8.15 per cent from 7.95 per cent, according to a notification.
MCLR is a methodology introduced by the Reserve Bank of India (RBI) which sets the lending rates by the banks.
Banks are raising interest rates even though the Reserve Bank has left rates unchanged for a while now, as risks such as surging bond yields and more provisioning requirements erode their profit.
On Wednesday, SBI raised interest rates on domestic bulk term deposits across most maturities. The country’s top lender by assets has hiked interest rates on retail and bulk deposits by up to 50 and 75 basis points respectively (100bps = 1 percentage point).
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