State Bank of India (SBI), the country’s largest lender, increased its marginal cost of funds-based lending rate (MCLR) by 10 basis points across tenors, effective April 15.
The overnight, one-month and three-month MCLRs have been hiked to 6.75 percent each from 6.65 percent earlier, according to SBI’s website.
The one-year MCLR currently stands at 7.10 percent from 7 percent earlier. The six-month MCLR is now 7.05 percent from 6.95 percent previously.
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The two-year and three-year MCLRs have been hiked 10 bps each to 7.30 percent and 7.40 percent, respectively.
Also, private sector lender Axis Bank has hiked MCLR by 5 bps across tenures effective today, April 18.
MCLR is an internal reference rate for banks set by the Reserve Bank of India (RBI) to help define the minimum interest rate on various types of loans, including home loans.
The RBI’s repo rate has been kept unchanged at 4 percent since May 2020. That’s the rate at which the central bank lends short-term funds to banks.
Retail inflation in India jumped to a 17-month high of 6.95 percent in March from 6.07 percent in February, driven by high food prices. If inflation concerns persist and there are no shocks to growth, interest rates will likely be hiked later this year, analysts said.
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Most economists expect the RBI’s monetary policy committee (MPC) to change its stance to ‘neutral’ in June and follow up with an increase in the key policy rate, which could be the first in a series of hikes this year.
