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SBI is a Shock to borrowers.. once again increase in loan rates !

State Bank of India (SBI) has once again shocked the borrowers. The key benchmark interest rates were hiked by 50 basis points. The bank has taken this decision in the wake of recent revision of repo rates by RBI by 50 basis points. It said on its website that the increased rates will be effective from today (August 15). With the latest decision of SBI, the EMIs will be burdensome for the borrowers. SBI has said that the External Benchmark Based Lending Rate (EBLR) and Repo Linked Lending Rate (RLLR) have been increased by 50 basis points. Also, the marginal cost of Funds Based Lending Rate (MCLR) has been increased by 20 basis points for all tenors. With the latest hike, EBLR has gone up to 8.05 percent and RLLR to 7.65%. The MCLR for the year has increased from 7.50% -7.70%. The 2 yr rate rose to 7.90 % and 3 yr rate to 8%. With these increased interest rates, the EMIs of those who have taken loans at those rates will increase. RBI introduced MCLR as a standard index in 2016 for transparency in interest rates. Whenever the RBI revises the interest rates, it has been brought in so that the benefit can be transferred to the borrowers faster. Banks decide this MCLR on the basis of the costs incurred in mobilizing deposits. This interest rate is fixed for a period of 1 day to 3 yrs. Most of the loans are linked to MCLRK for one yr. Banks add credit risk premium on EBLR and RLLR loans.

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