State Bank of India (SBI), the country’s largest lender, raised the marginal cost of its funds-based lending rate (MCLR) by ten basis points from April 15. The overnight, one-month, and three-month MCLR has been revised upwards to 6.75 per cent from 6.65 per cent previously, according to SBI’s website. The one-year MCLR is now at 7.10 per cent, up from 7 per cent previously.

The six-month MCLR is now 7.05 per cent, compared to 6.95 per cent earlier. The two-year and three-year MCLRs are revised upwards by ten basis points to 7.30 per cent and 7.40 per cent, respectively. In addition, private sector lender Axis Bank raised the MCLR by five basis points during its tenure from April 18.

MCLR is an internal reference rate set by the Reserve Bank of India (RBI) for banks to help determine minimum interest rates for various loans, including home loans. The RBI’s repo rate has remained unchanged at 4 per cent since May 2020. This is when the central bank provides short-term funds to banks. India’s retail inflation jumped to a 17-month high of 6.95 per cent in March from 6.07 per cent in February, driven by high food prices.

Analysts said a rate hike could be expected later this year if inflation concerns persist and growth does not take a hit. Most economists expect the RBI’s Monetary Policy Committee (MPC) to change its position to “neutral” in June and follow up with key policy rate hikes, which could be the first in a series of hikes this year.