SBI hikes lending rates by 10 bps across tenors, effective from August 15

State Bank of India (SBI), India’s largest state-run bank, has increased interest rates on loans by 10 basis points across tenors for the third consecutive month, effective from Thursday, August 15, 2024.
SBI’s Marginal Cost of Funds Based Lending Rate (MCLR) for a three-year tenor is now 9.10%, compared to 9% earlier. Overnight MCLR is now 8.20%, compared to 8.10 previously. The bank had raised its MCLR previously by up to 30 basis points in some tenors since June 2024.
Also Read: Starbucks reveals salary of new CEO Brian Niccol. Biggest perk: He can work remotely
MCLR is the absolute minimum interest rate at which a bank can lend money, except in some certain cases, where the Reserve Bank of India (RBI) allows it. A bank cannot lend money at an interest rate below it.
Also Read: Warren Buffett’s Berkshire now has a record $277 billion cash pile after selling spree
The RBI introduced MCLR in April 2016, replacing the base rate system used earlier for benchmarking lending rates.
This comes at a time when earlier, other PSU banks including Bank of Baroda, Canara Bank, and UCO Bank increased their MCLR, resulting in costlier consumer loans. Bank of Baroda and Canara Bank’s new MCLR is effective from August 12, 2024, while UCO Bank’s new MCLR is effective from August 10, 2024.
The RBI’s Monetary Policy Committee (MPC) kept its benchmark repo rate unchanged at 6.5% and also maintained status quo on policy stance on August 8, 2024.
The standing deposit facility (SDF) rate continues to be 6.25%, and the marginal standing facility (MSF) rate and the bank rate will be 6.75%.
Also Read: Indian IT services revenue growth to remain modest on soft IT spending: Fitch