SBI Hikes Lending Rate
For First Time Since April 2016, EMIs to get costlier
Country's largest lender State Bank of India on Thursday
raised the marginal cost of funds -based lending rate (MCLR)
for one year by 20 basis points to 8.15 per cent from 7.95 per cent. One basis
point is one-hundredth of a percentage point.
The new MCLR or the minimum lending rate will be
effective from March 1, 2018. The hike in lending interest rates comes a day
after SBI hiked deposit rates across maturities.
It raised MCLR rate for loans for other tenors too. The
maximum rise has been of 25 bps for loans up to maturity of three years. 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.
This is the first time a bank has raised the benchmark
lending rate after the MCLR system came into effect in April 2016. The MCLR
system replaced the base rate from April 1, 2016.
Tenor
|
Existing MCLR (In %)
|
Revised MCLR (In %)
|
Over night
|
7.70
|
7.80
|
One Month
|
7.80
|
7.80
|
Three Month
|
7.85
|
7.85
|
Six Month
|
7.90
|
8.00
|
One Year
|
7.95
|
8.15
|
Two Years
|
8.05
|
8.25
|
Three Years
|
8.10
|
8.35
|
For retail deposits below Rs.1 crore, SBI increased fixed deposit rates by up to 0.50 per cent, while for deposits maturing in one year to less than two years, the pricing has been raised by 0.15 per cent to 6.40 per cent from 6.25 per cent earlier.
Banks are raising interest rates even though the Reserve Bank is leaving its rates unchanged, as risks such as surging bond yields and more provisioning requirements erode their profit.
Another
state-run bank PNB also raised its lending rate, effective March 1, 2018. PNB
raised its one-year MCLR rate to 8.30 per cent from 8.15 per cent. After this,
ICICI Bank also raised its MCLR. The marginal cost of funds based lending
rate of ICICI Bank is now 7.95% for the overnight rate against the earlier rate
of 7.8%, a hike of 15 basis points.
Many banks have been
increasing their deposit and lending rates since the last quarter. While
lending rates have been jacked up on an average of 5-10 bps by private sector
lenders like HDFC Bank, Axis Bank, Kotak Mahindra Bank and Yes Bank since
January, almost all the state-run lenders have been increasing their bulk
deposit rates in the range of 15 bps to 125 bps.
According to the report, with a recovery in
demand for bank credit, banks with better capitalisation may raise lending
rates to improve net interest margins.