In a significant development, the State Bank of India (SBI) has announced an increase in interest rates on all loan tenures, effective August 15, 2024. The bank has raised the Marginal Cost of Lending Rates (MCLR) by 10 basis points across the board. This change is expected to impact customers who have taken home, car, or education loans from SBI, as their EMIs (Equated Monthly Installments) will increase accordingly.
MCLR hike affects all loan tenures
For the third consecutive month, SBI has raised its MCLR, which serves as the benchmark interest rate for lending. With this increase, the MCLR for a three-year loan has gone up from 9% to 9.10%. Additionally, the overnight MCLR—which applies to short-term loans—has increased from 8.10% to 8.20%. These hikes reflect SBI’s strategy to adjust lending rates in response to market conditions.
Impact on borrowers: Higher EMIs for SBI customers
This adjustment in MCLR will directly affect borrowers who have taken loans from SBI. Since MCLR is the minimum interest rate below which banks cannot lend, the increase means that customers will now have to pay higher EMIs. For instance, home, car, and education loans will now come with slightly higher monthly payments, putting additional financial pressure on borrowers.
Third consecutive MCLR increase since June 2024
SBI has been gradually raising its MCLR over the past few months. Since June 2024, the bank has increased MCLR by up to 30 basis points across various loan tenures. This consistent rise in the benchmark lending rate underscores the bank’s response to inflationary pressures and changing economic conditions.
What this means for future borrowers
For those planning to take out loans in the near future, this MCLR increase indicates that borrowing costs are likely to continue rising. Potential borrowers may need to reassess their loan options and budget accordingly, as higher interest rates will lead to increased monthly repayments.
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