SBI hikes lending rate by 5 bps across tenures effective July 15
The State Bank of India (SBI), the largest public sector lender in the country, has increased the marginal cost of funds-based lending rate (MCLR) by 5 basis points (bps) starting from July 15. As per the details available on SBI’s website, the MCLR based rates will now vary between 8 percent and 8.75 percent. MCLR represents the minimum rate at which the bank can offer loans to consumers. This hike comes after SBI raised the benchmark prime lending rate (BPLR) by 70 basis points on March 15.
The decision by SBI to raise lending rates follows the Reserve Bank of India’s (RBI) recent decision to maintain the repo rate at 6.50 percent, which is the rate at which the RBI lends short-term funds to commercial banks.
In response to rising inflation, the RBI has increased interest rates by 225 basis points since May. This increase in lending rates is considered a result of the series of rate hikes implemented by the RBI’s Monetary Policy Committee since mid-last year, aimed at curbing inflation.
While the RBI decided to pause the repo rate in June 2023, Governor Shaktikanta Das indicated the central bank’s readiness to respond based on incoming data.
Economists expect the rate-setting panel to remain on pause for the rest of the year, with the possibility of a rate cut if inflation shows sustainable easing. This signals that the RBI’s tightening cycle is nearing its end.
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Updated: 14 Jul 2023, 09:10 PM IST
