India's largest PSU lender, State Bank of India (SBI) has hiked benchmark lending rates by 10 basis points across tenures. The 1-year Marginal Cost Of Funds Based Lending Rate (MCLR) is at 8.75%, while the highest benchmark rate is at 8.95%. The new rates have come into effect from June 15, 2024.
SBI MCL Rates:
As per the website, the MCR with effect from June 15, 2024, at SBI is at 8.75% for 1-year tenure, 8.85% for 2-years tenure, and 8.95% for a three-year tenure.
On the shorter tenures, MCLR at SBI is at 8.10% now for overnight, while the MCLR rate is at 8.30% each for three-month and six-month tenures.
These rates are up by 10 bps from previous MCLRs. Before June 15, SBI's MCLR rates were at 8.65% for 1 year, 8.75% for 2-years, 8.85% for 3 years, 8.20% each on 3-month and 6-month tenures, and lastly at 8% for overnight.
SBI's hike in MCLR comes despite RBI keeping the repo rate unchanged at 6.5% for the eighth consecutive policy. This is in line with market estimates. Also, the MPC maintained their policy stance to 'withdrawal of accommodation'.
Will EMIs Go Up?
It needs to be noted that broadly banks in India have shifted from MCLR to external lending rate which is linked to RBI's policy repo rate. HDFC Bank has not made any changes to it. Hence, not all borrowers will be impacted by the latest revision in MCLR.
MCLR was introduced on April 1, 2016, as the internal benchmark for banks. All floating rate rupee loans sanctioned and renewed were directed by RBI to be priced concerning the MCLR. This meant that lenders in India could not keep their term loan rates below this benchmark rate.
However, MCLR has been long scrapped. From October 1, 2019, RBI introduced external benchmark lending rates including linking lending rates with policy repo rates. And directed the scheduled commercial banks to transmit to external benchmarks since MCLR did not deliver effective transmission of monetary policy. However, existing loans and credit limits linked to the MCLR/Baserate/BPLR will continue till repayment or renewal, as the case may be.
SBI Home Loan EMI Calculator:
On regular home loans, SBI is offering a 9.55% rate to borrowers with CIBIL scores equal to or above 750. While on CIBIL score from 700-749, the rate is at 9.75%. Additionally, the rate rises to 9.85% on 650-699 credit scores, further to 10.15% on credit scores from 550-649. However, the rate is at 9.75% on NTC/NO CIBIL Score/-1.
Let's calculate SBI Home Loan EMIs using the bank's calculator. For EXAMPLE, if a loan of Rs 30 lakh is taken for a tenure of 10 years at an interest rate of 9.55%. Then EMI will come around Rs 38,901 per month, with total interest payable over the loan term around Rs 16.68 lakh. Lastly, the total payments made over the tenure of the loan would be around Rs 46.68 lakh.
Home loan is the money borrowed from a bank or a housing finance institution on interest for buying / constructing / upgrading a residential real estate property.
On its website, SBI explained that EMI or Equated Monthly Instalment is a fixed amount paid by you to the bank on a specific date every month. The EMI's are fixed when you borrow money from the bank as a loan. EMI's are used to pay both interest and principal amount of a loan in a way that over a specific number of years, the loan amount is repaid to the bank alongwith interest.
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