SBI Raises Lending Rates as RBI Maintains Repo Rate Amidst Inflation Concerns

17 Jul 2023 , 10:08 AM

The State Bank of India (SBI), the largest public sector lender in the country, has announced an increase in the marginal cost of funds-based lending rate (MCLR) starting from July 15. This move comes as the Reserve Bank of India (RBI) maintains its repo rate at 6.50 %, signaling a response to rising inflation.

MCLR Increase: SBI has raised the MCLR by 5 basis points (bps), bringing the rates between 8 % and 8.75 %. The MCLR represents the minimum rate at which the bank can offer loans to consumers.

Previous Rate Hike: This increase in lending rates follows SBI’s decision to raise the benchmark prime lending rate (BPLR) by 70 basis points on March 15.

RBI’s Repo Rate: The RBI, responsible for lending short-term funds to commercial banks, has decided to maintain the repo rate at 6.50 %.

Inflation Concerns: To tackle rising inflation, the RBI has implemented a series of interest rate hikes since May, totaling 225 basis points. This aims to curb inflationary pressures in the economy.

RBI’s Pause: Although the RBI paused the repo rate in June 2023, Governor Shaktikanta Das hinted at the central bank’s readiness to respond based on incoming data.
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