Sbi will increase its prime rate by 70 bps to 13.45% from September 15

By CNBC-TV18 IST (Released)

mini

Shares of State Bank of India ended at Rs 571.60, up Rs 13.35, or 2.39% on BSE.

The country’s largest lender, the State Bank of India (SBI), announced on Wednesday that it would raise the benchmark prime rate (BPLR) by 70 basis points to 13.45% effective Thursday (September 15).

The bank, however, did not change the marginal cost of the funds-based lending rate (MCLR), which would have lowered the cost for all borrowers.

Banks review the MCLR on a monthly basis, while the base rate review takes place once a quarter. Currently, banks set interest rates on loans with reference to the BPLR.

Earlier in August, the SBI raised its benchmark policy rates by up to 50 basis points (or 0.5%). The external benchmark-based lending rate (EBLR) and the pension-linked lending rate (RLLR) were raised by 50 basis points, while the increase in the marginal cost of the funds-based lending rate (MCLR) is 20 basis points for all mandates.

SBI’s EBLR rose to 8.05% and RLLR rose a similar 50 basis points to 7.65%. Banks add a credit risk premium (CRP) over EBLR and RLLR while granting any type of loan, including home and auto loans.

With the revision, the one-year MCLR increased to 7.70% from 7.50% previously, while for two years it increased to 7.90% and for three years to 8%. Most loans are tied to the one-year MCLR rate.

About Alma Ackerman

Check Also

Tough roster decisions await LAFC as it sorts through player contracts

Tough roster decisions await LAFC as it sorts through player contracts

The eventual MLS Cup champion LAFC celebrates after their victory over Austin FC in the …