EMI To Be Costly: Many types of loans including home loan, car loan will now become expensive. Because the country’s largest government bank State Bank of India has made loans expensive. State Bank of India has increased the Marginal Cost of Lending Rate (MCLR) by 10 basis points. This increase has come into effect from 15 April 2022.
How much did MCLR increase?
According to the SBI website, with effect from April 15, the bank has increased the overnight, one-month and three-month ACLR from 6.65 percent to 6.75 percent. The 6-month MCLR rate has been increased from 6.95 percent to 7.05 percent. The one-year MLCR has been increased from 7 per cent to 7.10 per cent, two-year from 7.20 per cent to 7.30 per cent and three-year MCLR from 7.30 per cent to 7.40 per cent.
What is MCLR
According to the new guidelines of RBI, now in lieu of the base rate, commercial banks pay the marginal cost of funds based on the basis of lending rate (MCLR). Marginal Cost of Funds plays an important role in determining the MCLR. Any change in the repo rate results in a change in the Marginal Cost of Funds. When the time comes for home loan customers to review their home loan interest rates, their EMIs will become costlier due to the increase in MCLR.
RBI did not make any change in the repo rate while reviewing the loan policy on 8 April. But banks are making loans expensive. The second state-owned bank, Bank of Baroda, also announced an increase in MCLR by 5 basis points last week.