The State Bank of India (SBI), the country's largest public sector lender, on Juky 14 hiked the marginal cost of funds-based lending rate (MCLR) by 5 basis points (bps) with effect from July 15.
Details on SBI’s website showed that the MCLR based rates will now range between 8 percent and 8.75 percent.
MCLR is the basic minimum rate at which a bank can give consumers loans.
Earlier, on March 15, the lender hiked the benchmark prime lending rate (BPLR) by 70 basis points.
The hike has been announced by SBI a month after the Reserve Bank of India (RBI) kept the repo rate, or the rate at which it lends short-term funds to commercial banks, at 6.50 percent.
Since May, RBI has hiked interest rates by 225 basis points to fight inflation. One bps is one hundredth of a percentage point.
The jump in lending rates is seen as a ripple effect of the rate hikes being implemented by the Monetary Policy Committee of the RBI since mid-last year, in a bid to tame inflation.
RBI while announcing the decision to pause the repo rate in June 2023, Governor Shaktikanta Das also signalled the central bank’s readiness to act in keeping with the incoming data.
While the RBI has largely come to the end of the rate-tightening cycle, the rate-setting panel is expected to remain on the pause mode for rest of the year with a chance of a rate cut if inflation eases on a sustainable basis, economists have said.
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