Your equated monthly instalments (EMIs) are going to go up as the largest public sector bank, State Bank of India (SBI), has increased its marginal cost of lending rate (MCLR) rate by 10 basis points across tenors, with an effect from June 1. For the period of one-year, SBI MCLR is now 8.25 per cent against the previous rate of 8.15 per cent. For two -year period, the MCLR rate is now 8.35 per cent against the rate of 8.25 per cent.

One basis point is one-hundredth of a percentage point.

How much will it impact your home loan EMI? An increase in MCLR usually increases home loan rates, unless banks lower the premium rate they charge over and above the MCLR on home loan rate. To give you an idea at the revised MCLR: if you have a home loan of Rs50 lakh for a period of 20 years, then your home loan EMI will go up by Rs 470 per month at Rs 42,603 from the earlier EMI of Rs 42,133.

MCLR is calculated on the basis of the incremental cost of funds. Initially, loans given before April 1, 2016, were linked with the base rate and it was calculated on the basis of the average cost of funds. From April 1, 2018, onwards, the bank regulator has, however, the linked base rate with MCLR in order to harmonise the movement of two rates. Banks offer you a set of at least five MCLR rates ranging from overnight, one month, three month, six month to one year. Banks have to declare these rates every month, but the revised rate will be applicable to you after the end of reset period.

HDFC Bank also recently increased its MCLR for one year by 10 basis points to 8.30 per cent. ICICI Bank also raised its one-year MCLR to 8.30% from 8.20% earlier.

SBI, on May 31, increased its interest rate on fixed deposit below Rs 1 crore by up to 25 basis point in select tenures. For fixed deposits with a maturity of one year to less than two years the FD rate has been raised to 6.65 per cent from the earlier rate 6.4 per cent. For the tenure of more than two years and less than three years, the interest rate is 6.65 per cent, 0.5 per cent higher than the previous rate of 6.6 per cent. The interest rate remains unchanged for other maturities.

The bank increased its fixed deposit rate to tackle the problem of advances growing faster than deposits. The bank has risen rates just before the RBI’s Monetary Policy Committee meet, which is scheduled to happen on June 4 and June 5.

SBI Lending Rate (MCLR) effective from 1st June, 2018:

Tenor

Existing MCLR (In %)

Revised MCLR (In %)

Over night7.807.90
One Month7.807.90
Three Month7.857.95
Six Month8.008.10
One Year8.158.25
Two Years8.258.35
Three Years8.358.45