Loans to pinch as State Bank hikes lending rate by 10 basis points across tenures. Details inside

State Bank of India (SBI), the country's largest state-run lender, increased its interest rates on loans by 10 basis points across all tenors, effective from August 15, 2024. 

This will be the third consecutive month of rate hikes by the bank. The Marginal Cost of Funds Based Lending Rate (MCLR) for various tenors has been revised as part of this adjustment.

With the new rates in place, SBI's MCLR for a three-year tenor has risen to 9.10% from the previous 9%. The overnight MCLR now stands at 8.20%, up from 8.10%. Here is the detailed breakdown of the revised MCLR rates:

• Overnight: Increased from 8.10% to 8.20%
• One Month: Increased from 8.35% to 8.45%
• Three Months: Increased from 8.40% to 8.50%
• Six Months: Increased from 8.75% to 8.85%
• One Year: Increased from 8.85% to 8.95%
• Two Years: Increased from 8.95% to 9.05%
• Three Years: Increased from 9.00% to 9.10%

These hikes follow a series of similar adjustments by other public sector banks, including Bank of Baroda, Canara Bank, and UCO Bank, which recently revised their lending rates. Bank of Baroda and Canara Bank made their changes effective from August 12, while UCO Bank's rate adjustments came into effect on August 10, 2024.

The series of rate increases by these banks occurred after the Reserve Bank of India (RBI) decided to keep the benchmark repo rate unchanged at 6.5% in its Monetary Policy Committee (MPC) meeting on August 8. 

The RBI also maintained the standing deposit facility (SDF) rate at 6.25% and the marginal standing facility (MSF) rate and the bank rate at 6.75%.

MCLR serves as the minimum interest rate below which banks are not permitted to lend, except in certain cases approved by the RBI. Introduced in April 2016, MCLR replaced the base rate system as the benchmark for lending rates. 

The continuous hike in MCLR indicates a trend of rising borrowing costs, affecting consumer loans across various tenures.