Calculate your EMI: SBI raises rates once again

Loans get more expensive, India's largest bank, the State Bank of India (SBI) raised its benchmark lending rates by up to 50 basis points (or 0.5 per cent), a move that will lead to an increase in EMIs for borrowers.

The increase in lending rate comes days after the Reserve Bank of India hiked its benchmark lending rate by 50 basis points to tame inflation.

External Benchmark based Lending Rate (EBLR) and Repo-Linked Lending Rate (RLLR) have been raised by 50 basis points while the hike in Marginal Cost of funds-based Lending Rate (MCLR) is 20 basis points across all tenure.

The revised rates are effective from August 15, as per the information posted on SBI website.

SBI's EBLR rose to 8.05 per cent and RLLR increased by similar 50 basis points to 7.65 per cent.

Banks add Credit Risk Premium (CRP) over the EBLR and RLLR while giving any kind of loan, including housing and auto loans.

With the revision, one-year MCLR has increased to 7.70 per cent, from the earlier 7.50 per cent, while for two years it rose to 7.90 per cent and for three years to 8 per cent.

Most of the loans are linked to the one-year MCLR rate.

The overnight to three-month SBI MCLR rate has been hiked to 7.35%, from 7.15%. The SBI six-month MCLR goes up to 7.65% from 7.45%, one-year to 7.7%, from 7.5%, two-year to 7.9% from 7.7% and three-year to 8% from 7.8%.

With the increase in lending rate, EMIs will go up for those borrowers who have availed loans on MCLR, EBLR or RLLR.

SBI hikes rates, loans & EMIs get more expensive

From October 1, 2019, all banks including SBI have migrated to an interest rate linked to an external benchmark such as RBI's repo rate or Treasury Bill yield. As a result, monetary policy transmission by banks has gained traction.