SBI hikes lending rates by 10 bps across tenors, effective from August 15

SBI's MCLR for a three-year tenor is now 9.10%, compared to 9% earlier, while overnight MCLR is now 8.20%, compared to 8.10 previously.

State Bank of India (SBI), India’s largest state-run bank, has increased interest rates on loans by 10 basis points across tenors for the third consecutive month, effective from Thursday, August 15, 2024.

SBI had raised its MCLR previously by up to 30 basis points in some tenors since June 2024. (HT)

SBI's Marginal Cost of Funds Based Lending Rate (MCLR) for a three-year tenor is now 9.10%, compared to 9% earlier. Overnight MCLR is now 8.20%, compared to 8.10 previously. The bank had raised its MCLR previously by up to 30 basis points in some tenors since June 2024.

What is Marginal Cost of Funds Based Lending Rate (MCLR)?

MCLR is the absolute minimum interest rate at which a bank can lend money, except in some certain cases, where the Reserve Bank of India (RBI) allows it. A bank cannot lend money at an interest rate below it.

The RBI introduced MCLR in April 2016, replacing the base rate system used earlier for benchmarking lending rates.

SBI's tenor-wise MCLR

Tenor	Existing MCLR	Revised MCLR
Overnight	8.10%	8.20%
One Month	8.35%	8.45%
Three Month	8.40%	8.50%
Six Month	8.75%	8.85%
One Year	8.85%	8.95%
Two Years	8.95%	9.05%
Three Years	9.00%	9.10%

This comes at a time when earlier, other PSU banks including Bank of Baroda, Canara Bank, and UCO Bank increased their MCLR, resulting in costlier consumer loans. Bank of Baroda and Canara Bank's new MCLR is effective from August 12, 2024, while UCO Bank's new MCLR is effective from August 10, 2024.

Why are banks hiking their MCLR?

The RBI's Monetary Policy Committee (MPC) kept its benchmark repo rate unchanged at 6.5% and also maintained status quo on policy stance on August 8, 2024.

The standing deposit facility (SDF) rate continues to be 6.25%, and the marginal standing facility (MSF) rate and the bank rate will be 6.75%.