The country's largest lender State Bank of India (SBI) has increased the benchmark lending rate or base rate by 0.1 per cent, a move that may be followed by other lenders.
State Bank Of India Hikes Base Rate By 0.1%. Will It Impact Existing Borrowers?
With the increase, the revised base rate is 7.55 per cent, as per the information posted on SBI's website. The new rate is effective from December 15, 2021, it said.
State Bank Of India Hikes Base Rate By 0.1%. Will It Impact Existing Borrowers?
State Bank Of India Hikes Base Rate By 0.1%. Will It Impact Existing Borrowers?
With the increase, the revised base rate is 7.55 per cent, as per the information posted on SBI's website.
The new rate is effective from December 15, 2021, it said.
The decision is not going to affect those who have taken loan since January 2019 but those before that.
SBI has migrated to External Benchmark Lending Rate (EBLR) linked to repo rate since January 2019. There is no change in the EBLR rate and this rate changes with a change in the benchmark interest rate of the Reserve Bank of India (RBI).
In the December monetary policy, RBI decided to keep the repo rate unchanged at 4 per cent.
This was the ninth time in a row when the central bank decided to maintain the status quo on benchmark lending rate to support growth rate.
The bank has also revised the benchmark prime lending rate to 12.3 per cent from 12.2 per cent.
With regard to domestic term deposits, the bank has decided to raise it by 0.1 per cent for high value deposits over Rs 2 crore.
Meanwhile, here are some key points that should be taken into considerations.
What is a bank’s base rate?
Base rate is the minimum interest rate at which a bank could lend to its customers who have their loans still under the base rate regime.
As a result, the overall interest rate of these old borrowers with floating rate loans like home loans will go up due to which they will either pay increased loan equated monthly installments (EMIs) or will have their loan tenure extended, a report in The Economic Times said.
State bank of India revised base rate of 7.55 per cent per annum will be effective from December 15, 2021.
Will other loan regimes be impacted?
This base rate hike is unlikely to remain limited to base rate only as we may soon see other benchmark rates like MCLR and external benchmark being hiked as well going forward. SBI being the market leader, other banks are likely to follow suit and raise their lending rates in the coming days.
All borrowers who had taken a floating rate home loan between July 2010 and March 2016 and did not shift their loans till now to any new regime?, the report added.
