NEW DELHI : State Bank of India (SBI), the country’s largest public sector lender, has raised its lending rates across key benchmarks, following the Reserve Bank of India’s (RBI) 25-basis-point hike in the repo rate last week. The revised rates, effective October 15, are expected to increase borrowing costs for customers whose loans are linked to the affected benchmarks.
SBI has raised its External Benchmark-linked Lending Rate (EBLR) by 25 basis points to 8.15 per cent, excluding the Credit Risk Premium (CRP) and the Bank Spread (BSP). The Repo Linked Lending Rate (RLLR) has also been increased by 25 basis points to 7.75 per cent, excluding the CRP.
The bank has also revised its Marginal Cost of Funds-based Lending Rates (MCLR) for select tenures by 15 basis points. The overnight and one-month MCLR rates remain unchanged at 7.85 per cent.
The three-month MCLR has been increased to 8.40 per cent from 8.25 per cent, while the six-month rate has risen to 8.75 per cent from 8.60 per cent. The one-year MCLR has been raised to 8.85 per cent from 8.70 per cent. The two-year and three-year MCLR rates have also been increased by 15 basis points to 8.90 per cent and 8.95 per cent, respectively.
RBI’s Rate Hike Triggers Lending Rate Revision
The revision follows the RBI’s decision to increase the benchmark repo rate by 25 basis points to 5.50 per cent on October 7, marking a shift towards tighter monetary policy.
The repo rate is the interest rate at which the RBI lends money to commercial banks. An increase in the rate raises the cost of funds for banks and can eventually translate into higher lending rates for borrowers.
Loans linked to external benchmarks, including the repo rate, generally reflect policy rate changes more quickly than loans linked to MCLR, which is influenced by banks’ cost of funds and other factors.
What Does It Mean for SBI Borrowers?
For borrowers with loans linked to EBLR or RLLR, the rate revision could translate into higher interest payments, depending on their loan terms and the timing of the next reset.
Home loan borrowers may see their equated monthly instalments (EMIs) rise if their lenders increase the applicable interest rate. Alternatively, borrowers may continue paying the same EMI for a longer period, depending on the bank’s repayment terms.
The impact on borrowers with MCLR-linked loans will depend on the relevant benchmark tenure and the loan’s reset date. Since SBI has increased MCLR on select tenures, the revision will not affect all borrowers uniformly.
Borrowers should check their loan agreements and revised interest rates to understand the impact on their monthly repayments.
The latest revision is confined to lending benchmarks. It does not, by itself, mean SBI has raised interest rates on its fixed deposits or savings accounts.
