SBI Ups Lending Rates: Impact on Borrowers

The State Bank of India (SBI), the country’s largest lender, has raised its marginal cost of fund-based lending rate (MCLR) by 0.05 percent for certain tenors, effective Friday. The bank's Chairman, C S Setty, stated that deposit rates have peaked and won't be a customer draw.

The State Bank of India (SBI), India's biggest lender, announced a marginal increase in its marginal cost of fund-based lending rate (MCLR) by 0.05 percent for selected tenors on Thursday.

This revision will see the one-year MCLR, which is crucial for long-term borrowings such as home loans, rise to 9 percent starting Friday, according to the bank's website notice.

The move comes amidst concerns that escalating deposit costs, fueled by a competitive banking sector, will lead to increased lending rates. SBI's chairman, C S Setty, emphasized that 42 percent of the bank's loans are tied to MCLR, and clarified that deposit rates have reached their peak and won't be used to attract customers.

(With inputs from agencies.)