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State Bank of India increases the interest rate
Posted on: 01/Sep/2018 4:17:02 PM
The leading public sector bank in the country, the State Bank of India has increased the interest rate by 0.2%. With this, the interest rate for housing and vehicle loans will also increase.
The Reserve Bank of India increased the basic interest rate for loans by 0.25% in June. Thus, the basic interest rate became 6.25%.
Following this, the State Bank of India has increased the interest rate for loans by 0.2%. This will be effective from today (1st September).
With the interest rate being fixed based on MCLR, a month’s loan of MCLR based interest is increased from 7.9% to 8.1%.
For a period of the 1-year loan, MCLR will increase from 8.25% to 8.45%.
For a 3 year period, this has been increased from 8.45% to 8.65%.
The banks fix the interest by considering all factors such as the interest rates given for deposits, the interest rates for the loans taken, etc., In other words, the basic interest rate is fixed based on the rate of interest paid by the banks for the loan taken by them.
This procedure was revised. As per the revision, the banks earn revenue from not only the short-term lending but also the loans for fixed higher durations as well. The banks decided to fix the interest based on this revenue. This is called ‘Marginal Cost of Lending Rate’ (MCLR).
Earlier, the interest rate was fixed based on the basic interest rate. Now, the interest rates for the loans of various durations are fixed based on MCLR.
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