SBI hikes MCLR rates by 10 Basis points, will raise $ 100 mn through bonds

The State Bank of India (SBI) has increased its marginal cost of funds-based lending rate (MCLR) by 10 basis points (0.1%) across all tenures, effective from June 15. This adjustment would impact the higher EMIs for borrowers with loans linked to MCLR.

The hike witnesses the one-year MCLR rise to 8.75% from 8.65%, the overnight MCLR go up to 8.10% from 8.00%, and the one-month and three-month MCLR increase to 8.30% from 8.20%. The six-month MCLR now stands at 8.65%, up from 8.55%. Additionally, the two-year MCLR has been raised to 8.85% from 8.75%, and the three-year MCLR is now 8.95%, up from 8.85%. Most retail loans, including home and auto loans, are linked to the one-year MCLR rate.

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However, the MCLR hike does not affect borrowers with loans tied to external benchmarks like the RBI’s repo rate or Treasury Bill yield.

SBI also announced on Friday that it has raised $100 million (approximately Rs 830 crore) through bonds to support business growth. The senior unsecured floating rate notes, with a three-year maturity and a coupon of secured overnight financing rate (SOFR) +95 basis points per annum, will be issued through SBI’s London branch on June 20, 2024.

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SBI is making these financial moves as part of a larger trend where banks are adjusting lending rates in response to changes in the monetary policy. The aim is to ensure that policy rates are effectively passed on to end consumers. This adjustment will affect a considerable number of SBI's borrowers, especially those with MCLR-linked loans.

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