The current EMIs of the existing customers will not be affected by the new increase in lending rates (MCLR) since most of the consumer loans come at the external benchmark linked price (Image: X @SBI)
The country’s largest lender and financial powerhouse State Bank of India (SBI) hiked its interest rate by 10 bps (basis points) across all tenors to protect margins as the bank tails deposits at a higher price will come into effect by August 15. The SBI announced that it has hiked the marginal cost of funds by 10bps of the based lending rate (MCLR) across maturities, which controls over 23 per cent of the system-wide assets effective from August 15, as per its website on Wednesday.
The revised rate is said to be 8.2% by 10 bps, a month rate of 8.45%, a three-month rate of 8.5%, months of 8.85%, a year rate of 8.95%, a two-year rate of 9.05% and three years to 9.10% respectively. The bank might have to protect the margin and pegged the FY25 average net interest margin at 3.25-3.30 per cent, stated Chairman Dinesh Khara during the June quarter earnings release.
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As per the reports, the current EMIs of the existing customers will not be affected by the new increase in lending rates (MCLR) since most of the consumer loans come at the external benchmark linked price. The bank has already rolled out a deposit drive last month offering 7.10 or 7.30% under 600 days for short-term fixed deposits annually. The bank intends to go with depositors’ money keeping it long but didn’t see much success in all these years.
It has been on the discussion that the finance ministry asking banks to find feasible ways to persuade people to invest cheap funds from those who have been investing their money in mutual funds and the stock market as well. MCLR is known as the Marginal Cost of Lending Rates which is considered the lowest lending rate a bank is allowed to lend below based on funds.
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