SBI Ups Lending Rates: Impact on Borrowers

The State Bank of India (SBI), the country’s largest lender, has raised its marginal cost of fund-based lending rate (MCLR) by 0.05 percent for certain tenors, effective Friday. The bank's Chairman, C S Setty, stated that deposit rates have peaked and won't be a customer draw.

The State Bank of India (SBI), India's biggest lender, announced a marginal increase in its marginal cost of fund-based lending rate (MCLR) by 0.05 percent for selected tenors on Thursday.

This revision will see the one-year MCLR, which is crucial for long-term borrowings such as home loans, rise to 9 percent starting Friday, according to the bank’s website notice.

The move comes amidst concerns that escalating deposit costs, fueled by a competitive banking sector, will lead to increased lending rates. SBI's chairman, C S Setty, emphasized that 42 percent of the bank's loans are tied to MCLR, and clarified that deposit rates have reached their peak and won't be used to attract customers.