First Published Nov 15, 2022, 1:23 PM IST
State Bank of India, the country’s largest public sector bank, has hiked the MLCR rate by 10 to 15 basis points. This hike is effective from today.
For MLCR-linked borrowers, the monthly installments will increase drastically and the amount due will be higher
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MLCR for 1 month and 3 months increased from 7.60 percent to 7.75 percent. MLCR for 6 months to one year has increased from 7.90 percent to 8.05 percent.
The MLCR for 3 years has been increased from 8.15 per cent to 8.25 per cent and for more than 3 years from 8.25 per cent to 8.35 per cent.
What is MLCR?
The base interest rate is determined by including the interest rate on deposits given by the banks and the interest rate on the purchase loan.
This system was changed and the banks decided to determine the base interest rate based on the amount of money available to the banks in each period.
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This is called Marginal Cost of Lending Rate (MLCR). Interest on loans will be fixed in addition to the base interest rate earlier. Now MCLR. Basically the interest on the loans is fixed.
A change in the MLCR rate will directly reflect in the interest on the loan. That means if one takes a loan from a bank based on MLCR, if the MLCR is raised, the EMI for the loan will immediately increase, if it is lowered, the EMI amount will also decrease.
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Inflation in the country has come down to 6.75 percent in October. Although lower than in September, it fell short of the Reserve Bank’s benchmark of 6 percent.
As a result, it is said that the Reserve Bank may increase the repo rate by up to 50 points in the fiscal policy meeting in the first week of December. Even before this announcement, SBI Bank had hiked the MLCR rate
Last Updated Nov 15, 2022, 1:23 PM IST