The nation’s largest lender State Bank of India on Wednesday marginally increased the short-term lending rates across overnight to three year maturities by 10 basis points (bps) with immediate effect. While banks have almost fully passed on the 250 bps interest rate hikes by the Reserve Bank since last May, they have not yet increased deposit rates commensurately, leading to a funding gap and forcing them to borrow from the market.
For the fortnight ending January 13, credit growth rose 16.5% annualised as against 10.6% growth in deposits. According to the SBI website, the bank has increased the overnight lending rate, based on the marginal cost of funds-based lending rate, by 10 bps to 7.95%, while the same for one-and three-month maturity has been increased to 8.10%.
For a six-month loan, the bank has been charging 8.30% before the increase which now stands at 8.40%; one-year money that used to come in at 8.40% is costlier by 10 bps now; two-year money is now cost 8.60%, while the three-year money is priced at 8.70%, after the revision. The rate hike won’t affect the retail customers of home and auto loans as they are of long term duration.
Leave a Reply