Amidst the inflation and rising costs in India; the State Bank of India has increased it loan interest rates

State Bank of India has increased its marginal cost of fund-based lending rates by up to 10 basis points, effective July 15, 2024. This hike affects various loan tenures and will make most consumer loans, including auto and home loans, more expensive for borrowers.

This is a change that will affect all the borrowing clients in India as the State Bank of India (SBI) has declared a rise in its loan interest rates from 15 July 2024. This rate change has resulted in most consumer loans becoming expensive due to an increase in the bank’s MCLR by up to 10 bps for some tenors.

The one-month MCLR has gone up by 5 bps to hit 8 as per the information on the bank’s website. 35% for the one-year tenor and by 10 basis points to 8. 40%. On this, the six-month, one-year, and two-year MCLR rates have been raised by 10 bps each, and now reads 8. 75%, 8. 85%, and 8. 95% respectively. MCLR linked to three years has been increased and it is now 9% up from 5 bps.

For SBI, this is the second consecutive month of rate hikes after the bank raised rates in June 2024. It is set to impact a broad universe of borrowers especially those having auto and home loans that are benchmarked to these rates.

However, regarding the MCLR rates we see that they are moving and consequently SBI’s External Benchmark Lending Rate (EBLR) is still at 9. 15% in addition to credit risk premium (CRP) and business strategy premium (BSP). The interest rates on home loans at SBI still exists from 8.50% to 9.65 percent, which may be adjusted based on borrowers CIBIL rating.

The base interest rate of the bank is 10. 40 percent, starting from June 15, 2023, whilst the Benchmark Prime Lending Rate (BPLR) stands at 15 percent. 15% per annum as of June 15, 2024 as provided in the document.

Also Read: Indian Consumer Inflation is now at 5 In this context. 08% in June

This rate hike is seen against the backdrop of Reserve Bank of India (RBI) keeping the repo rate at 6. 5% for the ninth consecutive meeting. For the ninth consecutive meeting, the results showed a 5% increase. It has been estimated that borrowers may have to wait for a long time to achieve any such reduction in interest rates, given the fact that no rate cuts are expected in the foreseeable future.