SBI has hiked the MCLR and the impact on the EMI for the common man will be harsh in this summer season. The car and home loan EMI are all set to increase. Also, once SBI increases EMI, other banks may also follow the same.
What is MCLR and its impact on car and home loans
MCLR stands for Marginal Cost of Funds-based Lending Rate. It is a method used by banks to determine the interest rates on loans. Introduced by the Reserve Bank of India (RBI) in April 2016, MCLR aims to improve the transparency in the method of interest rate calculation. Its purpose is particularly to ensure that the benefits of lower borrowing costs are passed on to customers more effectively.
Updated MCLR Rates:
- One-month and Three-month Tenure: Increased from 8.20% to 8.30%
- Six-month Tenure: Increased from 8.45% to 8.55%
- One-year Tenure: Increased from 8.65% to 8.75%
- Two-year Tenure: Increased from 8.75% to 8.85%
- Three-year Tenure: Increased from 8.85% to 8.95%
Basically, the MCLR has changed for all tenures.
SBI increases EMI on car, home loans
The increase in the interest is 10 basis points. To understand, 10 basis points (bps) is equal to 0.1 per cent. The changes in the MCLR will impact most retail loans. These loans include home and auto loans, which are typically linked to the one-year MCLR rate. Additionally, even the personal loans will be impacted. Certainly, this will pinch the common man’s finances hard.
Meanwhile, SBI announced on Friday that it has successfully raised USD 100 million (approximately Rs 830 crore) through bonds to particularly support business growth.
The funds were raised via senior unsecured floating rate notes with a three-year maturity and a coupon rate of the secured overnight financing rate (SOFR) plus 95 basis points per annum, payable quarterly in arrears under Regulation-S, according to SBI’s regulatory filing.
