Loan EMIs expensive, SBI hikes interest rates for second time in a month



SBI Increases Loan Interest Rates

The common people of India, already grappling with rising prices, are facing yet another blow as State Bank of India (SBI) has decided to increase loan interest rates for the second time in a month. These new rates will come into effect from January 15, 2023.


Rising Inflation and Loan Burden

With inflation on the rise, everyday expenses are becoming more burdensome. Adding to these woes, SBI’s recent announcement of another interest rate hike spells trouble for those with loans.


The Impact of RBI’s Repo Rate

The Reserve Bank of India (RBI) has been continuously raising the repo rate in an effort to control inflation. This move has a direct impact on interest rates for various loans, including home loans, car loans, and personal loans. Following the RBI’s December repo rate hike, most banks raised their interest rates, and SBI joined the fray by implementing higher rates starting December 15, 2022.


SBI Loans Get Pricier

SBI has decided to raise its loan interest rates by 0.10 percent, based on the marginal cost of funds. This increase has led to higher interest rates on certain fixed-term bank loans, resulting in an impending increase in EMIs for loan customers.


Interest Rate Hike on One-Year Loans

In particular, SBI has increased interest rates on one-year loans, which will now stand at 8.4 percent, up from the previous 8.3 percent. Two-year term loans will carry an interest rate of 8.5 percent, while three-year term loans will be charged at 8.6 percent.


Consistency in Overnight Term Loans

SBI has maintained the MCLR (Marginal Cost of Funds-based Lending Rate) at 7.85 percent, even for overnight term loans. The interest rates for loans with durations ranging from 1 month to 6 months will remain unchanged. One-month and three-month loans will continue to carry an 8 percent interest rate, while six-month loans will have an 8.3 percent interest rate.


Understanding MCLR

MCLR plays a crucial role in determining the interest rates for loans disbursed by banks. It serves as the minimum interest rate below which banks cannot lend to customers. Based on these MCLR values, banks set interest rates for a variety of loans, including home loans, car loans, personal loans, and other consumer loans.


A Widespread Trend

It’s not just SBI that has increased lending rates in January 2023. HDFC Bank, Bank of Baroda, Union Bank of India, ICICI Bank, and PNB have also followed suit, raising concerns for borrowers across the country.



SBI’s decision to raise loan interest rates for the second time in a month comes as a significant challenge for common people already struggling with inflation. As these higher rates take effect from January 15, 2023, borrowers must brace themselves for more expensive EMIs. The impact of these rate hikes is not limited to SBI alone, as several other banks have also chosen to increase lending rates, making it a widespread trend affecting borrowers nationwide.