In a concerning development for the State Bank of India (SBI) customers, the bank has hiked the lending rate, thus impacting the home loan and other long term loans. The SBI announced a 0.05 per cent increase in the marginal cost of fund-based lending rate (MCLR) in some tenors.
The SBI has now increased the one-year MCLR by 0.05 per cent to 9 per cent effective from Friday. The one-year MCLR is a key tenor to which long-term loans like home finance are linked. The lender has raised the MCLR twice recently, driven by concerns that rising deposit costs—due to intense competition among banks for liabilities—will eventually lead to higher lending rates.
SBI Chairman C S Setty shared that 42 per cent of the bank’s loans are tied to the MCLR, while the rest are linked to external benchmarks. He also mentioned that deposit rates have likely reached their highest point and that the bank will avoid using interest rates as a primary attraction for new customers.
SBI has also raised the MCLR for three- and six-month terms, while keeping it unchanged for overnight, one-month, two-year, and three-year terms.
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