SBI hikes lending rates by 5-10 bps from today, stock rise 1.7%; check details

The public sector lender released an update on the official website saying that its marginal cost of lending rate (MCLR) has been increased by 5-10 basis points for loans with tenure ranging from 1 month to 3 years.

MCLR is the minimum interest rate that a financial institution needs to charge for a loan. Banks review their interest rates under the MCLR regime every month at a pre-announced date. Any increase in MCLR translates into higher interest rates on loans that are directly linked to this benchmark rate.

SBI’s retail loans like home loans are mostly linked to the repo rate (that has not changed since February 2023). Hence, a revision in MCLR is not going to affect these loans.

According to the update on the SBI website, MCLR for one-month loans has been hiked by 5 bps to 8.35%. For three-year loans, too, MCLR has been raised by 5 bps to 9%.

For loans with tenure of 3 months, six months, one year and two years, MCLR has been increased by 10 bps to 8.4%, 8.75%, 8.85% and 8.95%, respectively.

This means the customers availing loans from SBI will have to pay higher EMIs (equated monthly instalments) due to a hike in interest rates.

After the announcement, SBI shares rose as much as 1.7% on Monday to hit an intraday high of ₹875 apiece on the NSE as investors anticipate a hike in MCLR rates could give a boost to the bank’s earnings in coming quarters. Year-to-date, the SBI stock has gained over 36%.

This is the second hike in SBI’s MCLR in two months. The bank had last revised its MCLR by 10 bps in June. Two consecutive increases in MCLR by SBI are significant as it can lead to other banks following suit and raising their benchmark rates as well.