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How SBI Loan Customers (Home, Car Loan customers) Will be Impacted By MCLR
The banks will have to fix interest rates for different types of customers on the basis of the MCLR. Taking into consideration the repo rate and other lending rates, banks revise the MCLR on a monthly basis. Five benchmark rates are required for different tenures which range from 1 day to 1 year. The banks are free to set rates for tenures exceeding 1 year. Banks cannot lend below the MCLR but there are a few exceptions. For loans against deposits and loans to employees of the respective bank, banks can lend below the MCLR.
Notably, the Reserve Bank in its monetary policy last week kept the repo rate unchanged at 4 percent. However, it is said to prioritise inflation overgrowth going ahead, as the geopolitical tensions have fuelled price rise across the globe.
Earlier, the state-owned Bank of Baroda (BoB) had raised the marginal cost of funds-based lending rates by 0.05 percent across tenors with effect from April 12, 2022. The benchmark one-year tenor MLCR rose to 7.35 percent. “The bank has approved the review of marginal cost of funds based lending rate (MCLR) with effect from April 12, 2022”, BoB said in a regulatory filing.
The overnight, one-month, three-month and six-month MCLRs have been hiked by 0.05 percent each to 6.50 percent, 6.95 percent, 7.10 percent and 7.20 percent respectively. The benchmark one-year tenor MCLR will make consumer loans such as personal, auto and home loans pricey among others.
