State Bank of India (SBI) on Friday hiked its marginal cost of funds-based lending rate (MCLR) on various tenures by 5-10 basis points (bps), a move that could make consumer loans, such as auto or home loans, more expensive for borrowers.SBI’s decision to raise the MCLR comes after theReserve Bank of India’sdecision to keep the repo rate unchanged at 6.5% in its latest monetary policy.
The new rates are 8.20% for a one-month tenure, 8.20% for a three-month tenure, 8.55% for a six-month tenure, 8.65% for a one-year tenure, 8.75% for a two-year tenure, and 8.85% for a three-year tenure, according to the bank website.
“As far as policy rates are concerned, it is moving in the right direction. From that perspective, I do not expect policy rates to go up further,” he said, adding that the current hike in MCLR is unlikely to weigh on loan growth.
Earlier this month, HDFC Bank had hiked its MCLR on select tenures by up to 5 bps. The revised rates for HDFC Bank’s loans are in the range of 8.70-9.25%.Going ahead, other banks may also opt to hike the MCLR, but the quantum would hinge on their cost of funds.
IDBI Bank deputy managing director Suresh Khatanhar said only those banks with a high credit-to-deposit ratio and high growth requirements are inclined to hike the MCLR, as the cost of deposits would also be higher for these lenders.Biju E Punnachalil, chief risk officer at South Indian Bank, said: “MCLR of South Indian Bank has already been increased by 1.60% from May 2022.
A further increase in MCLR may be limited as we do not expect much increase in the deposit rates.”While the RBI has increased the repo rate by 250 bps since May 2022, the one-year median MCLR rose by only 152 bps during the May 2022–October 2023 period, the ‘State of Economy’ published by RBI’s monthly bulletin for November, showed