State Bank of India increases benchmark rates after 3 years

India’s biggest bank, State Bank of India has increased its Marginal Cost of Lending Rate. MCLR has been hiked by 10 basis points. The MCLR was the benchmark for home loans until it was replaced with the external benchmark (repo) linked rate in October 2019. Other than this India’s biggest lender SBI also announced that it has raised $500mn through foreign borrowing. After the increase in MCLR, home loans will become costlier for all borrowers who sought home loans before October 2019. Other than this Wholesale borrowers are also expected to see an increase in the cost of funds. However, those customers who borrowed after October 2019 will see their rates increase only after RBI raises its repo rate. The Reserve Bank of India is expected to increase the repo rate in June 2022.

SBI, on Monday also informed that it has raised $500mn offshore borrowing from IFSC Gift City through loan syndication. This is the lender’s first overseas borrowing linked to the US Secured Overnight Financing Rate, which replaces the erstwhile London Interbank Offered Rate. Informing about this, Managing Director of SBI, Ashwini Kumar Tewari said: “The successful launch of the syndicated loan at such a fine pricing demonstrates the kind of reputation SBI has created for itself in offshore financial markets allowing it to efficiently raise funds even during ongoing turbulence in the markets caused by geopolitical tensions and rate hike expectations by US Federal Reserve and other central banks across the globe,”