The State Bank of India (SBI) has announced a hike in its loan interest rates, effective from July 15, 2024. This move sees the bank increasing its marginal cost of fund-based lending rate (MCLR) by up to 10 basis points (bps) on select tenures, a change that will affect various consumer loans including auto and home loans.

In June 2024, SBI had already increased the MCLR on select tenures by 10 bps. This latest revision continues the trend, indicating a rising cost of borrowing for consumers. MCLR is the minimum interest rate below which banks are not allowed to lend, serving as a critical benchmark for various loan products.

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New MCLR Rates

One-month MCLR: Increased by 5 bps to 8.35%

Three-month MCLR: Increased by 10 bps to 8.40%

Six-month MCLR: Increased by 10 bps to 8.75%

One-year MCLR: Increased by 10 bps to 8.85%

Two-year MCLR: Increased by 10 bps to 8.95%

Three-year MCLR: Increased by 5 bps to 9%

These adjustments in the MCLR will directly impact the cost of new loans and the interest on existing loans that are due for a reset.

External Benchmark Lending Rates (EBLR)

Despite the changes in MCLR, SBI’s external benchmark lending rates (EBLR) remain unchanged at 9.15% plus CRP (Credit Risk Premium) and BSP (Base Spread). Home loans linked to the EBLR will see interest rates varying between 8.50% to 9.65%, depending on the borrower's CIBIL score.

The processing fee for these loans is set at 0.35% of the loan amount plus applicable GST, with a minimum charge of Rs. 2,000 and a maximum of Rs. 10,000, both inclusive of GST.

Base Rate and BPLR

SBI’s base rate, which is another critical rate for lending, stands at 10.40% effective from June 15, 2023. Additionally, the Benchmark Prime Lending Rate (BPLR) has been revised to 15.15% per annum as of June 15, 2024.

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Impact of RBI Repo Rate

Borrowers looking for relief in high interest rates may have to wait longer, as the Reserve Bank of India (RBI) has decided to keep the repo rate unchanged at 6.5%. This decision marks the ninth consecutive meeting where the central bank has maintained the current rate, reflecting a cautious stance amidst ongoing economic conditions. Experts are not anticipating a rate cut in the near term, indicating that high borrowing costs may persist.

In summary, the increase in SBI’s MCLR across various tenures indicates a higher cost of borrowing for consumers. The unchanged EBLR and stable base rates suggest that while the bank adjusts its internal lending rates, external benchmarks remain steady for now. Borrowers should stay informed about these changes and consider their impact on future and existing loans.

For more detailed information, you can visit the official SBI website to review the updated rates and other relevant details.

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