Expensive loans: After SBI, even in private banks MCLR based loans are expensive, EMI will have to pay more.
Inflation is rampant in the country. Then now more citizens have felt one more tweak. After State Bank of India (SBI), borrowing from Axis and Kotak Mahindra Bank has also become expensive. Both the banks have increased the marginal cost lending rate (MCLR) by 5 basis points.
Earlier, SBI also increased MCLR
Before these two banks, SBI has hiked interest rates on all term loans by 0.10%. According to SBI’s website, the marginal cost of lending rate (MCLR) for customers from overnight to three months will be 6.75% instead of 6.65%. At the same time, it has gone up to 7.05% instead of 6.95% for 6 months.
What will happen now ?
Experts say interest rates on loans based on margin cost of funds based lending rate (MCLR) will increase. With this, consumers will now have to pay more in personal, auto and home loan EMI.
What is MCLR?
Banks have been providing loans on the basis of MCLR since 2016. Banks determine MCLR after considering their operating expenses and cash reserve ratio. SBI charges high interest rates ranging from 0.10% to 1.5% in addition to the MCLR on home loans of various denominations, depending on the loan amount against the value of the property and the customer’s credit score.
