SBI Raises MCLR by 10-15 Bps on Effective Tenors Today. Loan EMI Burden To Go Up | DETAILS | Rare Techy

The marginal cost of lending rate is the minimum rate at which banks can offer loans to customers. It was introduced by the Reserve Bank of India (RBI) in 2016 to determine interest rates on various types of loans.

New Delhi: State Bank of India (SBI) has increased its marginal cost of lending rate (MCLR) by 10-15 basis points across tenors effective today, November 15. .

One-month and three-month MCLR increased from 7.60 percent to 7.75 percent; Six-month and one-year MCLR decreased from 7.90 percent to 8.05 percent; Three-year MCLR increased from 8.15 percent to 8.25 percent; three years MCLR reduced from 8.25 percent to 8.35 percent.

WHAT IS MCLR?

The marginal cost of lending rate is the minimum rate at which banks can offer loans to customers. It was introduced by the Reserve Bank of India (RBI) in 2016 to determine interest rates on various types of loans.

“MCLR is the benchmark rate of interest followed by banks for lending. This basically makes it the lowest rate of interest that a bank can lend, without reducing rates further,” said Pramod Kathuria, founder and CEO of Easiloan. he told ET.

Any change in MCLR will directly affect the cost of loans as interest rates increase, borrowers will automatically have to pay more EMIs. For existing borrowers, this hike will take effect when their personal loan rescheduling date comes and new borrowers will have to pay higher EMIs if their loans are subject to MCLR.

According to Bajaj Finserv, two effective strategies to reduce the impact of MCLR rates on EMIs are:

• Increase the loan tenor to reduce the EMI
• Make a pre-payment installment to reduce EMIs

Bajaj Finserv also adds that if your loan is availed after April 1, 2016, then it is automatically subject to MCLR mode. If your loan was taken before this date and is subject to the base rate regime, you can always switch to MCLR mode.