SBI, HDFC Bank, etc hike interest rates

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The trend of increasing  interest rates of loans in the country has once again begun. Several major banks, including SBI, HDFC Bank, PNB, Bank of Baroda, and Union Bank, have raised their Marginal Cost of Lending Rate (MCLR). This has made various types of loans more expensive. HDFC Bank has increased its interest rates by up to 10 basis points, while SBI has raised auto loan rates by up to 0.2%. The rise in interest rates will increase the burden of EMIs on individuals.

It’s noteworthy that most banks usually adjust their Marginal Cost of Lending Rate (MCLR) after changes in the repo rate, but this time it has not happened. The Reserve Bank of India has not made any changes to the repo rate since February 2023.

These banks have increased interest rates:

– SBI has increased interest on auto loans from 8.65% to 8.85%. – Bank of Baroda has raised auto loan rates from 8.7% to 8.8%, along with processing fees levy. – Union Bank is now charging an interest rate of 9.15% on auto loans, up from 8.75%, earlier.

HDFC Bank has added up to 10 basis points to its loan interest rates. IDFC First Bank has increased the interest rate on personal loans from 10.49% to 10.75%. Meanwhile, Karnataka Bank has raised the interest rate on personal loans from 14.21% to 14.28%.

What is MCLR?

Marginal Cost of Funds Based Lending Rate (MCLR) is the minimum rate below which no bank can lend to its customers. In other words, banks cannot offer loans to customers at rates lower than the MCLR. As this rate increases, the interest on loans also increases. Every month, banks are required to declare their MCLR for overnight, one month, three months, six months, one year, and two years period.