State Bank of India (SBI) has increased its benchmark marginal cost of fund based lending rate (MCLR) by 5 to 10 basis points across various tenures, effective from Monday. This adjustment marks the second consecutive rate hike by the country’s largest lender, following a similar move in June.
According to an update on its website, SBI has raised the MCLR by 5 to 10 basis points for periods ranging from one month to three years. A basis point equals 0.01 percentage point. Consequently, interest rates on loans tied to MCLR are expected to rise proportionally.
Specifically, the one-month MCLR has been raised by 5 basis points to 8.35%, while the three-month MCLR sees an increase of 10 basis points to 8.40%. Similarly, the MCLR for six months, one year, and two years has been revised upward by 10 basis points each, resulting in rates of 8.75%, 8.85%, and 8.95%, respectively. The three-year MCLR has been adjusted up by 5 basis points to 9%. All changes are effective from July 15.
Introduced on April 1, 2016, MCLR serves as the minimum interest rate below which banks cannot lend, reflecting changes in their cost of funds. Corporate loans are predominantly linked to MCLR, whereas retail loans typically use external benchmarks like the repo rate, which has remained unchanged by the RBI since February 2023.