Home / Companies / News /  SBI hikes lending rates by 20 bps from 15 June, EMIs to go up

Joining the bandwagon of the Marginal Cost Of Funds Based Lending Rate (MCLR) rate hike, the State Bank of India (SBI) raised the lending rates by 20 basis points on various tenures. The new lending rates will come into effect from June 15.

From June 15, SBI will impose an MCLR of 7.05% each on tenures such as overnight, for one month, and three months - compared to the current rate of 6.85%.

The MCLR on six months tenure will rise to 7.35% from the present 7.15%, while the one-year lending rate will increase to 7.40% from the current 7.20%.

MCLR for two years tenure will increase to 7.60% from the current 7.40%, meanwhile, the rate on three years tenure will stand at 7.70% from the present 7.50%.

Currently, the lending rate hike cycle has begun tracking in the RBI's policy repo rate hikes. Many banks like ICICI Bank, HDFC Bank, Bank of Baroda, Union Bank of India, and Canara Bank among others have already hiked their lending rates.

Introduced as an alternative to the base rate system, MCLR was introduced by RBI as a benchmark that is to be set by banks to not lend below this rate. Every month, banks revise their MCLR rate depending on the market conditions. MCLR is different for various tenors ranging from overnight to three years.

A certain percentage of term loans such as home loans, personal loans, car loans, and education loans are linked with MCLR. Thereby, the MCLR rate hike scenario typically hits borrowers' pockets as equated monthly instalments (EMIs) tend to rise as well.

Here is the list of interest rates levied by SBI on home loans, personal loans, and auto loans as per the official website as of June 14.

Home loans:

SBI's home loan rates vary from 7.05% to 7.55% depending upon the CIBIL score. Starting this month, SBI had earlier hiked its home loan rates on various tenures.

Currently, on a CIBIL score greater than or equal to 800, SBI offers a 7.05% rate on regular home loans, the rate is 7.15% on credit scores from 750-799. While the rate is 7.25% each on CIBIL score from 700-749, and NTC/NO CIBIL score/-1 scenario. The rate is 7.35% on a credit score of 650-699, while the rate is highest at 7.55% on a credit score of 550-649.

On home loans, SBI offers 5 basis points concession available to women borrowers subject to minimum EBR i.e 7.05%.

Auto loans:

Meanwhile, the bank levies a 7.45% to 8.15% interest rate on SBI car loans, NRI car loans, and an assured car loan scheme.

SBI imposes a 7.45% interest rate on a new car loan for borrowers having a credit score of 757 and above on 3-5 years tenure, while the rate is 7.55% above 5 years tenure for the same credit score.

On new car loans, SBI gives a 7.70% rate on 3-5 years tenure and 7.80% on above 5 years tenure to borrowers having a credit score of 721-756. On the CIBIL score 689-720, the bank charges 7.95% on 3-5 years tenure and 8.05% above 5 years. On a credit score of 606-688, the interest rate is 8.05% on 3-5 years tenure and 8.15% above 5 years. The rate is between 7.45% to 7.80% on CIBIL scores less than 1. For women concession of 5 basis points in this category of 606-688 credit score is offered.

On electric cars loan, SBI charges 7.25% to 7.60% interest rate. Meanwhile, on a two-wheeler loan, the rate varies from 16.45% per annum to 18.20% per annum.

Auto loans' interest rates are linked to a 1-year MCLR of 7.20%.

Personal loans:

There are various schemes offered under personal loans and the interest rates vary accordingly.

Applicants of defence, central armed police, and Indian coast guard can avail term loan facility at an interest rate of 9.80% - 11.30%.

SBI imposes an interest rate of 9.80% - 12.30% on applicants of the central government, state government, police, railways, and central public sector enterprises (CPSEs) considered under ‘RATNA’ status.

Applicants of other corporates are charged with an interest rate of 10.80% - 12.30%.

Notably, an overdraft facility is available in the above-mentioned category at an additional interest rate of 0.50% over a term loan.

Individuals holding salary accounts with SBI can avail loans at an interest rate of 9.80% - 11.30%. While salary account holders with other banks will have an interest rate of 10.05% - 11.55%.

The personal loan interest rates are comprised of a 2-years MCLR of 7.40%.

Lending and Deposit rates are set to rise further in the banking segment. Here's why:

ICICI Securities Research Analysts Kunal Shah, Renish Bhuva, and Chintan Shah in their sector update report dated June 11 said, "Given inflationary pressures, rising input costs, and surprise hikes in benchmark rates, we will watch out for the extent of decline in asset quality. As the proportion of EBR-linked loans for private banks was as high as 57% as of Dec’21 (vs 43% / 17.5% in Mar’21 / Mar’20), transmission will be more effective. Home loan and MSME segments are seeing immediate repricing while large industries, vehicles, and personal loans will reprice with some lag when banks revise MCLR in due course."

The trio added,"Banks have raised deposit rates across maturity buckets with peak retail TD rates at 5.75% and wholesale peak TD rates in the range of 5.25-5.75%. With the recent repo rate hike, deposit and lending rates will be further increased."

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