State Bank of India (SBI) has raised its marginal cost of funds based-lending rate (MCLR) that will make loans costlier for both its existing and new borrowers.

Since floating rate products such as housing loans are linked to an external benchmark such as the repo rate, SBI’s move will not affect the retail segment.

However, it will have an impact on new corporate borrowers.

Yet, there are still some retail borrowers who are under the MCLR regime.

Experts suggested these individuals should shift to an external benchmark-based lending rate system.

The revision will result in the benchmark 1-year tenor MCLR, which is used to price consumer loans such as auto and personal rising to 8.95 per cent against the earlier rate of 8.85 per cent.

According to the SBI website, the three-year MCLR has been raised to 9.10 per cent, while the two-year rate now stands at 9.05 per cent, also up 10 basis points.

The rates of one-month, three-month and six-month tenors are in the range of 8.45-8.85 per cent. MCLR on overnight tenor will be 8.20 per cent against 8.10 per cent.

The new rates are effective from August 15. The revision has come days after the RBI kept its benchmark lending rate unchanged at 6.5 per cent.