While the nation’s largest lender SBI raised its one-year MCLR (marginal cost of fund-based lending rate) by 20 basis points (bps) to 8.15 per cent, PNB increased its loan prices by 15 bps to 8.30 per cent. The lending rate hike by these lenders come even as the Reserve Bank has been in an accommodative/neutral stance since January 2015. 

The present RBI rate or repo rate is 5.75 per cent now. Even in the last policy review early last month, the central bank had sounded more accommodative than hawkish even though it increased its inflation forecast. 

Defending the hike that will hurt all borrowers, especially the individual borrowers the most, SBI said “in the past one month, liquidity situation, which used to be in surplus has become neutral or maybe in a minor deficit mode. The lending rate hike also comes in the wake of banks as a whole seeing pick-up in credit demand. 

After many years of low single-digit credit growth, the quarterly loan demand crossed the double-digit mark at close to 11 per cent in the three months to December 2017. 

The State Bank raised its six month MCLR by 10 bps to 8 per cent, while its three-year loan pricing goes up by 25 bps to 8.35 per cent. PNB also raised the overnight, one-month, three month and six- month rates by 15 bps to 7.80 per cent, 7.95 per cent, 8.10 per cent and 8.25 per cent, respectively. 

The SBI move comes a day after it had raised its retail and bulk term deposit rates for various maturities by up to 75 bps. For retail deposits, below Rs 1 crore, the rate was increased by up to 0.50 per cent, while for deposits maturing in one year to less than two years, it was hiked by 0.15 per cent to 6.40 per cent. 

PNB also increased its retail and bulk term deposits by up to 45 basis points today. For retail deposits maturing in one-year to three-year, rate has been increased by 25 bps to 6.75 per cent. The bulk deposits for one year maturity has been increased to 6.75 per cent from 6.50 per cent