SBI indicates another 10-15 bps MCLR hike

State Bank of India (SBI), the country's largest lender that recently raised its marginal cost of funds-based lending rates (MCLR), said these rates were yet to peak and might rise further by 10-15 basis points (bps).

- ABHIJIT LELE

This change primarily affects corporate loans, which are linked to the MCLR, reflecting the cost of funds for the bank. Retail loans, on the other hand, are linked to the external benchmark lending rate (EBLR), usually tied to the Reserve Bank of India's (RBI's) policy repo rate.

The decision to raise the MCLR comes after RBI Governor Shaktikanta Das asked banks to reassess their business models in view of the persistent gap between credit and deposit growth rates. The central bank has maintained the repo rate at 6.5 per cent since February 2023.

A top SBI executive told Business Standard on condition of anonymity that deposit rate transmission was nearly complete and any future adjustments would be specific to maturity buckets for asset-liability management.

"However, there is room to tweak the lending side where MCLR is the benchmark, by around 10-15 bps," the executive said.

SBI had increased MCLR by 10 bps across all maturities effective June 15. The one-year MCLR, to which most loans are linked, stands at 8.75 per cent.