MUMBAI: To protect margins as it chases deposits at a higher price, the country’s largest lender State Bank of India has increased its lending rate by 10 bps across tenors. The new loan prices will be effective August 15.
In a posting on its website, the lender, which controls over 23 percent of the system wide assets said Wednesday that it has increased the marginal cost of funds-based lending rate (MCLR) by 10 bps across maturities with effect from August 15. The bank has increased its overnight rate by 10 bps to 8.2%, one-month rate to 8.45%, three-months to 8.5%, six months to 8.85%, one-year to 8.95%, two-years to 9.05%, and three years to 9.10%.
Since most of the consumer loans are priced at the external benchmark linked rates, the MCLR increase may not immediately jack up the EMIS of existing customers.
During the June quarter earnings announcement, chairman Dinesh Khara had said the bank would protect its margins and pegged the FY25 average net interest margin at 3.25-3.30 percent.
Last month, the bank had launched a deposit drive offering 7.10-7.30% annually for short-term fixed deposits under 600 days. Prior that it had also increased the deposit rates. Banks have been chasing depositors money for long now but not with much success.
This had the regulator and also the finance ministry asking banks to devise innovative ways to attract cheap funds from the public who for some years have been parking their money in the stock market or mutual funds or other high-yielding asset classes, including the most-likely losing futures & options markets too.