India’s leading lenders State Bank of India (SBI) and ICICI Bank have increased their benchmark lending rates, which means your home, auto and other personal loans will become costlier.
SBI has increased its benchmark rates, or the marginal cost of funds-based lending rate (MCLR), by 20 basis points across all tenors up to three years. Most of the retail loans are benchmarked against one-year MCLR, which refers to the minimum interest rate of a bank below which it cannot lend, except in some cases allowed by the RBI. It is an internal benchmark or reference rate for the bank.
The bank’s overnight and the one-month rate is now pegged at 8.1 % as against 7.9%. The MCLR for a one-year tenor increased to 8.45% from 8.25% earlier. The MCLR for a 3-year tenor increased to 8.65 % from 8.45%.
As for ICICI Bank, the one-year MCLR was increased by 0.15% to 8.55%.
Both the banks had last revised their MCLR in June, just before the second bi-monthly monetary policy review of Reserve Bank of India.
The current rate hikes come a month after the RBI had raised the interest rate by 25 bps, which it did for the second time in two months in order to contain inflation.
The rate hike by the banks in June was the first time the benchmark lending rate was raised in over four years.
In August, mortgage lender HDFC hiked rates on home loans by 20 basis points. Union Bank of India, Kotak Mahindra Bank and Karnataka Bank had also increased their MCLR by 5-10 basis points in early August.
Now other banks are all set to hike the rates in the coming days.