Loans on EMI to get costly as SBI, PNB, ICICI Bank hike lending rates by 10 basis points
This is the second time in a year that SBI has raised the MCLR. On March 1, it raised the lending rate for one year by 20 basis points to 8.15 per cent from 7.95 per cent.
- Jun 1, 2018,
- Updated Jun 1, 2018 10:33 PM IST
Consumers expecting reduction in interest rates on loans should now be ready to pay more instead. India's three biggest banks, SBI, PNB and ICICI, have increased lending rates (MCLR) by 0.1 per cent, which would raise interest payable on loans. State Bank of India has hiked the Marginal Cost of Lending Rate by 10 basis points across all tenors up to three years. The second largest private lender ICICI has also raised MCLR by 10 basis points to 8.40 per cent for one year and three-year tenors. The new MCLR will be effective from June 1. Borrowers will not have to pay more interest if these banks decide to reduce their margin.
The hike in MCLR has been introduced just four days ahead of the RBI's bi-monthly monetary policy on June 6. This is the second time in a year that SBI has raised the MCLR. On March 1, it raised the lending rate for one year by 20 basis points to 8.15 per cent from 7.95 per cent. As per the SBI website, for the overnight and one month tenors, lending rates have been raised from existing 7.80 per cent to 7.90 per cent. For the three-month tenor, the new lending rate is 7.95; 8.10 for six-month tenor; 8.25 for one year; 8.35 per cent for two years; and 8.45 per cent for three years.
The state-owned Punjab National Bank (PNB), the country's second largest lender, raised the MCLR for three-year and five-year tenors to 8.55 per cent and 8.7 per cent, respectively. PNB has also increased the base rate to 9.25 per cent from the earlier 9.15 per cent.
ICICI Bank has also raised the MCLR by 10 basis points in loans with tenor of one year and three years. It raised five-year tenor MCLR by 10 basis points to 8.70 per cent. However, lending rate remains unchanged in case of loans up to three months.
MCLR includes marginal cost of funds, negative carry due to CRR (cost that banks incur on keeping funds with the RBI as CRR), operating costs and tenure premium (costs arising from loan commitments with a longer tenor). The final lending rate charged to a customer may include spread (a premium) to the MCLR.
Other banks may also follow suit. Most of home and auto loans are linked to MCLR. Meanwhile, mortgage lender HDFC said it has increased its retail prime lending rate (RPLR), on which its adjustable rate home loans (ARHL) are benchmarked, by 10 basis points, effective from June 2.
Karnataka Bank has raised its interest rates on deposits. Interest on domestic and NRE rupee term deposits for a period of one year to two years stands revised to 7.25 per cent from 7.10 (for deposits up to Rs 10 crore) representing a hike of 15 basis points, it said in a regulatory filing. The revised rates are effective from yesterday, it added.
One basis point is one-hundredth of a percentage point.
With PTI inputs
Consumers expecting reduction in interest rates on loans should now be ready to pay more instead. India's three biggest banks, SBI, PNB and ICICI, have increased lending rates (MCLR) by 0.1 per cent, which would raise interest payable on loans. State Bank of India has hiked the Marginal Cost of Lending Rate by 10 basis points across all tenors up to three years. The second largest private lender ICICI has also raised MCLR by 10 basis points to 8.40 per cent for one year and three-year tenors. The new MCLR will be effective from June 1. Borrowers will not have to pay more interest if these banks decide to reduce their margin.
The hike in MCLR has been introduced just four days ahead of the RBI's bi-monthly monetary policy on June 6. This is the second time in a year that SBI has raised the MCLR. On March 1, it raised the lending rate for one year by 20 basis points to 8.15 per cent from 7.95 per cent. As per the SBI website, for the overnight and one month tenors, lending rates have been raised from existing 7.80 per cent to 7.90 per cent. For the three-month tenor, the new lending rate is 7.95; 8.10 for six-month tenor; 8.25 for one year; 8.35 per cent for two years; and 8.45 per cent for three years.
The state-owned Punjab National Bank (PNB), the country's second largest lender, raised the MCLR for three-year and five-year tenors to 8.55 per cent and 8.7 per cent, respectively. PNB has also increased the base rate to 9.25 per cent from the earlier 9.15 per cent.
ICICI Bank has also raised the MCLR by 10 basis points in loans with tenor of one year and three years. It raised five-year tenor MCLR by 10 basis points to 8.70 per cent. However, lending rate remains unchanged in case of loans up to three months.
MCLR includes marginal cost of funds, negative carry due to CRR (cost that banks incur on keeping funds with the RBI as CRR), operating costs and tenure premium (costs arising from loan commitments with a longer tenor). The final lending rate charged to a customer may include spread (a premium) to the MCLR.
Other banks may also follow suit. Most of home and auto loans are linked to MCLR. Meanwhile, mortgage lender HDFC said it has increased its retail prime lending rate (RPLR), on which its adjustable rate home loans (ARHL) are benchmarked, by 10 basis points, effective from June 2.
Karnataka Bank has raised its interest rates on deposits. Interest on domestic and NRE rupee term deposits for a period of one year to two years stands revised to 7.25 per cent from 7.10 (for deposits up to Rs 10 crore) representing a hike of 15 basis points, it said in a regulatory filing. The revised rates are effective from yesterday, it added.
One basis point is one-hundredth of a percentage point.
With PTI inputs