SBI Hikes Loan Interest Rates; EMIs for Personal, Auto Loans To Rise

The State Bank of India (SBI) has raised its marginal cost of lending rates (MCLR) by 5 to 10 basis points (bps) across most tenures, with effect from today, July 15.This marks the second consecutive increase in lending rates by SBI, with adjustments made in both June and July. As a result, borrowers will face higher borrowing costs and increased equated monthly installments (EMIs) for customers. SBI has increased the one-month MCLR benchmark rate by 5 basis points to 8.35%, while the three-month MCLR benchmark rate has risen by 10 basis points to 8.40%. Additionally, the bank has raised the MCLR rates for six-month, one-year, and two-year tenures by 10 basis points, setting them at 8.75%, 8.85%, and 8.95%, respectively. 

The three-year MCLR has been increased by 5 basis points to 9%.The increase is likely to impact loans and equated monthly installments for customers. Most corporate loans will also be impacted. Notably, EMIs of loans such as personal or auto loans that are linked to MCLR, and will rise, while home loans which are tied to the repo rate will not witness a rise.

Repo rate has remained unchanged. The Reserve Bank of India has maintained it at 6.5 per cent since February 2023. A 4:2 majority of the RBI Monetary Policy Committee (MPC) decided to keep the repo rate unchanged, marking the eighth time the central bank has left rates steady. The three-day RBI MPC meeting, chaired by RBI Governor Shaktikanta Das, was held from June 5 to June 7.