Due to a rise in the marginal cost of funds-based lending rates (MCLR) by SBI (State Bank of India) by 10 basis points, the EMIs of car and home loans might rise soon. Previously, other private banks like Bank of Baroda, Axis Bank and Kotak Mahindra Bank had raised their MCLR by 5 basis points.
According to a report by Indian Express, the MCLR of SBI is 7.1%. For Bank of Baroda and Axis Bank, it is slightly higher, i.e. 7.35% and 7.4% respectively.
What is MCLR?
MCLR was introduced on April 1, 2016, by the RBI to determine the interest rates for loans. It is a reference rate that is used by banks internally. Below these lending rates, banks are not allowed to lend their money to customers.
Usually, the MCLR is revised when RBI changes the repo rate. But in the latest Monetary Policy Meeting, the central bank decided to keep the repo rate unchanged at 4% for the 11th time.
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