State Bank of India (SBI), the country’s biggest lender, has officially hiked its MCLR (marginal cost of funds based lending rate) by 5 basis points after the Reserve Bank of India (RBI) decided to keep policy rates at the same levels in its bi-monthly monetary policy review that took place on the 5th of December, 2018. SBI has increased the MCLR by 5 basis points throughout all its loan tenor. 1 basis point here equates to 1/100th of a percentage point.
This increase is now effective from 10th December, 2018 and home loans and other loans are expected to be costlier from now on. The new MCLR rates are 8.20% for overnight and one month tenors at SBI while they are 8.25% and 8.40% for three month and six month tenors. The MCLR rates are also 8.55% and 8.65% for one year and two year tenors. For three year tenors, the MCLR rates are now 8.70%. The BPLR (benchmark prime lending rate) has also been hiked to 13.80% by SBI while it has also increased its base rate to 9.05%.
In both these cases, there has been an increase of 5 basis points. Current customers will only feel the impact of the hike in MCLR when the reset date comes up for their home loans. The reset date is mostly 6 months or 1 year as per the home loan agreement between the bank and the customer. The EMIs will be calculated on the basis of the MCLR rate and margin if applicable on the reset date and this is when current home loan customers will see their EMIs increasing.