Going by the historical figures mentioned in the bank’s website, the new BPLR is the highest since 6 September 1996, when it hit 15.50 per cent and the base rates stood at 10.10 per cent.
New Delhi: State Bank of India (SBI), the country’s largest lender, has increased its benchmark prime lending rate (BPLR) by 70 basis points to 14.85 per cent and base rate by 70 bps to 10.10 per cent effective Wednesday, as per information on the bank website. The bank changes these rates in a quarterly cycle.
Going by the historical figures mentioned in the bank’s website, the new BPLR is the highest since 6 September 1996, when it hit 15.50 per cent and the base rates stood at 10.10 per cent.
The marginal cost of funds-based lending rate (MCLR) has, however, left unchanged across all tenures. The MCLR was raise last month by 10 basis points across tenures. The overnight MCLR currently stands at 7.95 per cent, one year MCLR stands at 8.50 per cent and three-year MCLR stands at 8.70 per cent.
BPLR touching a record high may not be of significant concern for borrowers as maximum number of borrowers have their loans already linked to the external benchmark linked rate (EBLR) or MCLR.
In November 2022, SBI chairman Dinesh Khara had said that 74 per cent of the bank’s total home loans are linked to MCLR and EBLR. He added that 21 per cent of loans are fixed rate and rest (4 per cent) of the loans are linked to BPLR. SBI’s gross advances rose 17.6 per cent on year to Rs 31.33 lakh crore as of December end.
A further hike in the MCLR up to 150 basis points is expected in the next fiscal on account of a sharp rise in lenders’ cost of funding., as per experts quoted by Financial Express.
“The drawdown from the reverse repo in FY23 to the tune of Rs 5 trillion has enabled banks to address a surge in the gap between incremental credit and deposit, and this will not be available in FY24. Therefore, MCLR will show a significant rise,” India Ratings & Research said in a report on Tuesday.
Read More: Bank likely to pump MCLR pricing by 100-150 bps in FY24 as funds gap widens: Report
The weighted average lending rate (WALR) on banks’ fresh rupee loans increased 12 bps month-on-month to 9 per cent in January, while WALR on outstanding rupee loans increased by 6 bps month on month to 9.58 per cent, as per latest RBI data. Meanwhile, the one year median MCLR of banks increased from 8.35 per cent in January to 8.45 per cent in February.
“…incremental funding by banks in FY24 would have to be done by way of fresh deposits, therefore the marginal cost of funding will go up significantly. Overall, deposit rates in the banking system have shot up by 150 to 200bp in the last one year, which has resulted a 75bp increase in aggregate deposits in the system,” as per India Ratings & Research.
