The SBI’s MCLR hike comes just days after the RBI MPC announced a 25 bps repo rate hike to 6.5 per cent on February 8.
The State Bank of India (SBI) announced a hike in the marginal cost of funds-based lending rate (MCLR) by 10 basis points (bps) across tenures. The new rates will be effective from February 15. MCLR is the minimum rate at which a bank can provide loans to its customers.
The Reserve Bank of India (RBI) established MCLR in 2016 to determine lending rates for various loans. It usually takes the same trajectory as the RBI monetary policy committee (MPC) takes.
“The MPC was of the view that further calibrated monetary policy action is warranted to keep inflation expectations anchored, break the persistence of core inflation and thereby strengthen the medium-term growth prospects. Accordingly, the MPC decided to raise the policy repo rate by 25 basis points to 6.50 per cent. The MPC will continue to maintain a strong vigil on the evolving inflation outlook so as to ensure that it remains within the tolerance band and progressively aligns with the target,” RBI Governor Shatikanta Das said during the announcement.
The inflation, despite a cumulative rate hike of 250 bps, has still managed to move out of the RBI’s upper tolerance limit of 6 per cent. India’s retail inflation in January rose to 6.52 per cent. It was 5.72 per cent in December. The wholesale inflation, however, has eased to a two-year low of 4.73 per cent.
Following the repo rate hike, many banks like Bank of Baroda, Bank of India, and Punjab National Bank have also hiked their key lending rates. SBI is the latest addition to the list.
According to SBI’s website, the overnight MCLR rate has been hiked by 10 bps to 7.95 per cent. The MCLR for a one-month tenure has been raised by 10 bps from 8 per cent to 8.10 per cent.
The three-month MCLR has been raised to 8.10 per cent from 8 per cent in January. The six-month MCLR is now 8.40 per cent from 8.30 per cent earlier.
For one-year maturity, the new rate has been increased to 8.50 per cent from 8.40 per cent earlier.
For two-year maturity, MCLR has been hiked to 8.60 per cent from 8.50 per cent while three-year tenure has been raised to 8.70 per cent from 8.60 per cent.