SBI Raises MCLR Rates: How Do MCLR Rates Affect Customers? Explained

State Bank Of India ( SBI ) has declared A 0.05 per cent or 5 basis points increase in MCLR or Marginal Cost Of Funds based lending rate.

What Are The New Rates?

The new MCLR rates are 8.55 per cent for three months, 8.90 per cent for six months, and 9per cent for one year, respectively. The MCLR for three and six months will come into effect from November 15, 2024. All other MCLR rates remain unchanged.

What Is MCLR?

MCLR was introduced by the Reserve Bank Of India in 2016 for faster transmission of repo rate. It replaced the erstwhile BPLR or Benchmark Prime Lending Rate. MCLR includes repo rate, current cost of cash, and operating costs, among others. Given its speed, it helps banks define minimum interest rates for loans at a faster pace. MCLR has been replaced by the External Benchmark Lending Rate or EBLR for common users, while large corporations still use MCLR.
In effect, a larger interest rate means more money will come to the bank and help control money circulation in the market. Lesser money circulation means less money chasing the same number of goods, thereby helping curb inflation.

Why Should People Care?

MCLR is the minimum rate below which banks cannot lend. It has a direct impact on the loans availed by people, particularly corporates. This means the EMI, bank loans, home loans, etc will suffer because of the EMI. 

Also Read: SpaceX Tender Offer: New Tender Offer To Make Elon Musk’s Company Worth $250 bn - Details | Republic Business