SBI gave a shock of 440 volts to crores of its customers, from home to car loan, now they will have to pay more EMI.
Business News Desk – State Bank of India (SBI), the country’s largest government bank, has shocked crores of its customers. The country’s leading public sector bank SBI on Thursday (November 14) announced an increase in its Marginal Cost of Funds Based Lending Rate (MCLR) by 0.05 percent. This step has been taken despite the fact that interest rates have started falling across the world. RBI is also expected to start cutting the key repo rate in 2025. MCLR is the cost of funds for lenders.
Banks add a spread to the MCLR and price their loan rates. Thus, an increase in MCLR is likely to lead to an increase in interest rates on loans. A basis point (BP) is one hundredth of a percentage point. According to the bank’s website, the one-year MCLR has been increased by 0.05 per cent to 9 per cent from Friday. The one year MCLR rate determines the rate for loans like personal, vehicle and housing. The bank has recently increased MCLR twice.
According to PTI, the bank’s chairman CS Shetty said that 42 per cent of the bank’s loan segment is linked to MCLR, while the rest is based on external benchmarks. He also clarified that deposit rates in the banking system are at their highest level. He said that the bank will not use interest rate as an attraction factor for customers.
SBI has also increased the MCLR of three and six months. MCLR of one day, one month, two years and three years has been retained. On Thursday, Commerce and Industry Minister Piyush Goyal had said that the Reserve Bank of India (RBI) should definitely cut interest rates. He also said that in the last 10 years of Modi government, the average inflation in India has been the lowest since independence.
On the latest retail inflation data for October 2024, Goyal said, “When the RBI monetary policy committee last presented its recommendations, they too had predicted a jump in inflation this month. This is not rocket science.” India’s CPI inflation reached a 14-month high of 6.1 percent in October. This is the first time since August that inflation has crossed the Reserve Bank of India’s 6 percent limit. Food inflation stood at 10.87 percent.” He said, “This (inflation by October 2024) is not a surprise. “Inflation numbers are going to fall again in December or January.”
