SBI raises lending rates

NEW DELHI: The State Bank of India (SBI) on Monday announced an increase in its Marginal Cost of Funds Based Lending Rate (MCLR) by 5-10 basis points for most tenors. With this, there will be a slight increase in the interest on home, auto, personal and corporate loans of SBI customers. The rate hike came into effect on Monday.

The MCLR represents the minimum rate at which a bank can lend money and is a crucial factor in determining loan interest rates. This adjustment by SBI is significant as it reflects changes in the cost of funds and overall market conditions. Other banks are also likely to increase interest rates on loans in the coming days.

The Reserve Bank of India (RBI) implemented the MCLR system in April 2016, replacing the base rate system to enhance transparency in the interest rate-setting process. This system aims to ensure that the benefits of reduced lending rates are passed on to borrowers more effectively.