A "low interest" loan shouldn't mean you have very little interest in paying it back!
State Bank of India has revised the Marginal Cost of funds based Lending Rate with effect from 15 September 2021. MCLR is defined as the minimum rate of interest benchmarked by the bank below which the bank cannot lend to the customers.
MCLR rates slashed by SBI across all tenors
State Bank of India has slashed its Marginal Cost of funds-based Lending Rate (MCLR) by 5 to 10 basis points (bps) across for short-term loans. The new rates are effective from 15 September 2021. While the 1-year MCLR rate still stands at 7.00% p.a. (after the 15 September 2021 rate cut), the one month, two months, and three months rates have witnessed the rate cuts. This will bring down the Equated Monthly Instalments (EMIs) on home loans that are linked to the MCLR.
| Tenor | SBI MCLR Rates |
|---|---|
| Overnight | 6.65% |
| 1 Month | 6.65% |
| 3 Month | 6.65% |
| 6 Month | 6.95% |
| 1 Year | 7.00% |
| 2 Years | 7.20% |
| 3 Years | 7.30% |
Switching to a MCLR to a base rate system primarily involves two steps.
State Bank of India, one the leading lenders by assets in the country, has raised the marginal cost of funds based lending rates (MCLR) across tenures by 5 basis points. The revised rates shall be effective immediately. With home loan interest rates linked to the MCLR, the interest rates are expected to go up on the loans. New home loan borrowers will have to pay a higher rate of interest on their loans while existing borrowers can continue paying the same rate until the reset clause is specified. In most MCLR-linked home loans, the bank resets the rate of interest only after 6-12 month as per the agreement between the bank and the customer. Once the reset clause has been activated, the rate of interest associated with the new MCLR becomes the new rate. The new rate will be the benchmark on which the existing borrower’s future Equated Monthly Instalments (EMI) will be computed. However, one can always make regular partial prepayments in order to reduce the burden of interest.
| Revised Date | Overnight MCLR | 1 month MCLR | 3 month MCLR | 6 month MCLR | 1 year MCLR | 2 year MCLR | 3 year MCLR |
|---|---|---|---|---|---|---|---|
| 10 September 2021 | 6.65% | 6.65% | 6.65% | 6.95% | 7.00% | 7.20% | 7.30% |
| 10 August 2021 | 6.65% | 6.65% | 6.65% | 6.95% | 7.00% | 7.20% | 7.30% |
| 10 July 2021 | 6.65% | 6.65% | 6.65% | 6.95% | 7.00% | 7.20% | 7.30% |
| 10 June 2021 | 6.65% | 6.65% | 6.65% | 6.95% | 7.00% | 7.20% | 7.30% |
| 10 May 2021 | 6.65% | 6.65% | 6.65% | 6.95% | 7.00% | 7.20% | 7.30% |
| 10 April 2021 | 6.65% | 6.65% | 6.65% | 6.95% | 7.00% | 7.20% | 7.30% |
| 10 March 2021 | 6.65% | 6.65% | 6.65% | 6.95% | 7.00% | 7.20% | 7.30% |
| 10 February 2021 | 6.65% | 6.65% | 6.65% | 6.95% | 7.00% | 7.20% | 7.30% |
| 10 January 2021 | 6.65% | 6.65% | 6.65% | 6.95% | 7.00% | 7.20% | 7.30% |
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