The most recent additions to the list of banks to increase repo-linked rates, as well as their marginal cost of funds-based lending rates (MCLRs), are SBI, Kotak Mahindra Bank, and Federal Bank.
Banks increased their repo-linked lending rates by a comparable amount when the Reserve Bank of India increased the repo rate by 50 basis points to 5.90% on September 30. They gradually increased lending rates that were based on the marginal cost of capital as well.
State Bank of India (SBI), the largest lender in the nation, increased the MCLR for the benchmark one-year tenor by 25 basis points to 7.95%, effective as of October 15, 2022.
The majority of consumer loans are tethered to the one-year tenor MCLR rate.
Additionally, SBI increased the two- and three-year MCLRs from 7.9% and 8% to 8.15% and 8.25%, respectively. The rates for overnight, one, three, and six months have all increased by 7.60—7.90%.
With effect from October 16, 2022, Kotak Mahindra Bank announced that the MCLR for various tenors has been fixed in the range of 7.70-8.95%. Its updated MCLR rate for one year is 8.75%. South-based Federal Bank stated that as of October 16, its one-year MCLR on loans and advances had been reduced to 8.70%.
Following RBI rate action, lenders including Punjab National Bank, ICICI Bank, Yes Bank, HDFC Bank, and Bank of Baroda have already increased their MCLR rates.
As soon as the RBI boosted repo - the rate at which it lends short-term money to banks - on September 30, a number of lenders, including SBI, ICICI Bank, Punjab National Bank, Bank of India, and mortgage lenders, increased their repo rate-linked lending rates as well.
The last time Axis Bank updated its MCLR was on September 17, 2022.
For better transmission of rate changes, all banks switched to interest rates that are tied to an external benchmark starting on October 1, 2019, such as the Treasury Bill yield or the repo rate of the RBI.
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