State Bank of India (SBI) has raised the base rate and Benchmark Prime Lending Rate (BPLR), effective from March 15, 2023. According to the SBI’s website, base rate has been hiked to 10.10 percent from 9.40 percent, an increase of 70 basis points. SBI benchmark prime lending rate has been raised to 14.85 percent from 14.15 percent, an increase of 70 basis points.
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As a result, equated monthly installment (EMI) amount for the borrowers who have taken loans at these rates would go up. These are the old benchmarks on which banks used to disburse loans. Now, most of the banks provide loans on marginal cost of lending rates (MCLR).
SBI has kept marginal cost of lending rates (MCLR) unchanged this time.
Base rate:
This is the the minimum interest rate at which Indian banks could lend. It is determined significantly on the average cost of funds.
Here's a historical data on SBI's base rate:
| Effective Date | Interest Rate (%) |
|---|---|
| 15.03.2023 | 10.10 |
| 15.12.2022 | 9.40 |
| 15.09.2022 | 8.70 |
| 15.06.2022 | 8.00 |
| 15.03.2022 | 7.55 |
| 15.12.2021 | 7.55 |
| 15.09.2021 | 7.45 |
BPLR:
BPLR was introduced by the Reserve Bank in 2003. It is the rate at which commercial banks charge their customers who are most credit worthy.
Here's a historical data on SBI's benchmark prime lending rate:
| Effective Date | Interest Rate (%) |
|---|---|
| 15.03.2023 | 14.85 |
| 15.12.2022 | 14.15 |
| 15.09.2022 | 13.45 |
| 15.06.2022 | 12.75 |
| 15.03.2022 | 12.30 |
| 15.12.2021 | 12.30 |
| 15.09.2021 | 12.20 |
| 15.06.2021 | 12.25 |
MCLR:
This is also the minimum interest rate below which financial institutions can't lend, except in certain cases. However, unlike base rates, home loan MCLR rate is based on the incremental/marginal cost of funds.
Here's a look at SBI's Marginal Cost Of Funds Based Lending Rate (MCLR):
| Tenor | Existing MCLR (In %) |
| Over night | 7.95 |
| One Month | 8.1 |
| Three Month | 8.1 |
| Six Month | 8.4 |
| One Year | 8.5 |
| Two Years | 8.6 |
| Three Years | 8.7 |
The increase in rates of SBI come days ahead of the Reserve Bank of India's (RBI) monetary policy meeting.
The RBI will likely remain hawkish in the April policy as inflation prints have spiked back over 6 percent in January-February along with core inflation remaining sticky above 6 percent, according to Suvodeep Rakshit, Senior Economist, Kotak Institutional Equities.
The RBI hiked the repo rate by 25 bps to 6.5 percent in the February monetary policy meeting and lowered the consumer inflation projection for the year ending March 2023 by 20 bps to 6.5 percent.
(Edited by : Anshul)
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