Loan EMI is likely to increase as SBI hikes MCLR by up to 10 bps; check latest interest rates here

On Friday, December 15, the State Bank of India (SBI) announced an increase in the marginal cost of funds-based lending rate (MCLR) on select tenures by 5-10 basis points. This means that consumer loans, such as auto or home loans, will become more expensive for borrowers. 

The lender's choice to increase rates follows the December 8, 2023 decision by the monetary policy committee (MPC) led by RBI Governor Shaktikanta Das to maintain the repo rate at 6.5% for the fifth consecutive time.

Impact on borrowers

As a result of the increase in MCLR, equated monthly instalments (EMIs) on loans will become more expensive. Customers who are currently applying for a loan will have to accept the loan at the new, higher rate.

Additionally, customers who have already taken out a loan will have to pay their future instalments at this increased rate. However, it's important to note that MCLR-based loans have a reset period, after which the rates are revised for the borrower.

Overview of the revised MCLR of SBI

(Source: SBI bank website) 

The new rates are 8.20% for a 1-month tenure, 8.20% for a 3-month tenure, 8.55% for a 6-month tenure, 8.65% for a 1-year tenure, 8.75% for a 2-year tenure, and 8.85% for a 3-year tenure, according to the SBI's website. 

These revised rates are now in effect starting today. This change also affects other tenures, with the exception of the overnight tenure, which remains unchanged at 8.00%.