SBI Hikes MCLR By 10 Basis Points
SBI's MCLR hike will impact existing borrowers.
India’s largest lender raised the marginal cost-based lending rate by 10 basis points, indicating a pivot from the easing interest rate cycle.
State Bank of India raised the one-year MCLR rate to 7.1% from 7%, effective April 15, according to a notification on its website. The rates have been hiked across overnight to three-year loan tenors.
The hike will impact existing borrowers. From April 1, 2019, all new retail and small business loans were linked to an external benchmark such as the repo rate.
This is the second time in less than six months that SBI has hiked the lending rates. In December 2021, the lender had hiked the base rate by 10 basis points.
The latest hike by the state-run lender came after the Reserve Bank of India, while announcing the Monetary Policy Committee’s decision on April 8, said it would focus on inflation control. While the MPC decided to hold the policy repo rate at 4% with an accommodative stance, it said the focus will be toward withdrawing the accommodation to ensure that inflation remains within the target while supporting growth.
The Consumer Price Inflation index for March came in at 6.95%, the highest in nearly 17 months. That breached the upper limit of the RBI’s retail inflation tolerance band of 4(+/- 2%).