- By Aditya Pratap Singh
- Fri, 15 Nov 2024 03:35 PM (IST)
- Source:JND
India's top public sector lender, the State Bank of India (SBI), declared a 0.05 per cent increase in the marginal cost of funds-based lending rate (MCLR) across various tenures. A notice on the lender's website stated that the one-year MCLR, a crucial tenure to which long-term loans such as home finance are tied, has been raised by 0.05 percentage points to 9% beginning Friday.
The lender has twice raised MCLR in recent months, citing fears that the higher cost of deposits as a result of banks' war of words on the liabilities side would ultimately result in higher lending rates. The bank's chairman, C S Setty, had earlier said that 42% of the bank's loan book is linked to MCLR, with the rest based on external benchmarks.
He also stressed that deposit rates are extreme in the system and the bank would not use the rate as an attraction factor for customers. The SBI has also raised the MCLR for three and six-month tenors while keeping it unchanged for one-day, one-month, two-year, and three-year tenors.
According to the bank's website, the one-year MCLR has been increased by 0.05 percentage points to 9 percentage points effective Friday. The one-year MCLR rate determines the interest rate on loans such as personal, vehicle, and housing. The bank has recently raised the MCLR twice.
Bank chairman CS Shetty told PTI that 42% of the bank's loan portfolio is linked to MCLR, with the remainder based on external benchmarks. He also clarified that deposit rates in the banking system are at their highest level. He stated that the bank will not utilize interest rates as a customer attraction factor.
SBI has also raised the MCLR for three and six months. The MCLRs for one day, one month, two years, and three years have been maintained. Commerce and Industry Minister Piyush Goyal stated on Thursday that the Reserve Bank of India (RBI) should cut interest rates. He also stated that India's average inflation has been the lowest since independence during the previous ten years of the Modi government.
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