SBI Home, auto loan borrowers alert! EMIs to go up, bank hikes lending rates
However, the higher EMIs will only be applicable to the borrowers who have availed loans on MCLR.
New Delhi: State Bank of India (SBI) home and auto loan customers will be burdened a little more EMI as the bank has hiked its lending rates. The revised MCLR rate is effective from April 15, as per the SBI website.
The country's largest lender has raised its marginal cost of funds based lending rate (MCLR) by 10 basis points (bps) or 0.1 percent across all tenures. Higher MCLR rate means that borrowers will have to pay an increased in EMIs.
However, the higher EMIs will only be applicable to the borrowers who have availed loans on MCLR. It will not be applicable for borrowers who have taken loans linked to other benchmarks.
SBI's EBLR rate is 6.65 per cent, while the repo-linked lending rate (RLLR) is 6.25 effective April 1.
Banks add Credit Risk Premium (CRP) over the EBLR and RLLR while giving any kind of loan including housing and auto loans.
With the revision, one-year MCLR has increased to 7.10 per cent, from the earlier 7 per cent.
An overnight, one-month and three-month MCLR rose by 10 bps to 6.75 per cent, whereas a six-month MCLR increased to 7.05 per cent. Most of the loans are linked to the one-year MCLR rate.
At the same time, two-year MCLR increased by 0.1 per cent to 7.30 per cent, while three-year MCLR rose to 7.40 per cent.
From October 1, 2019, all banks including SBI have to lend only at an interest rate linked to an external benchmark such as RBI's repo rate or Treasury Bill yield. As a result, monetary policy transmission by banks has gained traction.
Usually other banks also follow suit once SBI revises its MCLR rates.
With PTI Inputs