State Bank of India, country’s largest lender, raised its marginal cost of funds based lending rate (MCLR) by 5 basis points (bps) across all tenures, causing borrowers’ EMIs to rise. The increased MCLR rate goes into effect on July 15.
With the hike, EMIs will rise for borrowers who have taken out loans based on the MCLR, and not for those whose loans are based on other benchmarks. The majority of loans are tied to the one-year MCLR rate.
The overnight, one-month, and three-month MCLRs increased by 5 basis points to 8 per cent, 8.15 per cent, and 8.45 per cent, respectively, while the six-month MCLR jumped to 8.45 per cent.
At the same time, two-year MCLR also increased by 5 bps to 8.65 per cent, while three-year MCLR rose to 8.75 per cent.
The influence of the implementation of external benchmark-based loan pricing on monetary transmission has been felt across a wide range of industries, including those not immediately related to external benchmark-based loan pricing.