A little less than a week after the Reserve bank of India (RBI) raised the repo rate by 50 basis points, the State Bank of India (SBI) has hiked its deposit and lending rates. While the new deposit rates come into effect from 14 June, the revised lending rates are from 15 June.

For home loans, SBI has raised minimum rate to 7.55%.  The external benchmark-based lending rate (EBLR) to a minimum of 7.55% from 7.05% earlier.  

The country’s largest bank has raised interest rates by 0.20% on domestic term deposits of below Rs 2 crore for select tenors.

For deposits maturing in 211 days to less than 1 year, the bank will offer interest rate at 4.60% versus 4.40% earlier. Senior citizens will be offered an interest of 5.10% as against 4.90% earlier.

SBI will now offer an interest rate of 5.30% on domestic term deposits of 1 year to less than 2 years. This was 5.10% earlier. For senior citizens, the interest rate will be higher by similar margin at 5.80%.

Deposits maturing in two to less than three years will now earn 5.35% interest rate, from 5.20 per cent, a 15 basis point increase. For senior citizens, the interest rate will be higher by similar margin at 5.85%.

The lender has also revised the interest rates on domestic bulk term deposits of Rs 2 crore and above for select tenors by up to 0.75%.

For deposits maturing in 1 year to less than 2 years, customers having bulk deposits will earn interest at 4.75% from 4% earlier. For senior citizens, the new rate will be 5.25% as against 4.50%.

"Premature penalty for bulk term deposits for all tenors will be 1%. It will be applicable for all new deposits including renewals. The revised rates of interest shall be made applicable to fresh deposits and renewals of maturing deposits," SBI said.

SBI has also revised by up to 0.20% the marginal cost of fund-based lending rates (MCLR) with effect from 15 June.

The benchmark one-year MCLR has been revised upwards to 7.40% from the existing rate of 7.20%. Most of the consumer loans such as auto, home and personal loans are linked to MCLR.

The overnight to three-year tenor MCLRs have been raised to 7.05-7.70%.

SBI has also raised the repo linked lending rate (RLLR) with effect from 15 June. The revised RLLR will be 7.15% plus credit risk premium (CRP), as against the existing 6.65% plus CRP.

The MCLR system came into effect from 1 April 2016 for better transmission of interest rates to customers.

From October 1, 2019, all banks have to lend only at an interest rate linked to an external benchmark such as RBI's repo rate or treasury bill yield. As a result, monetary policy transmission by banks has gained traction.

Several banks have raised rates following RBI's repo rate revision on 8 June. As reported earlier, HDFC Bank, ICICI Bank, Punjab National Bank, Bank of Baroda, IDFC First Bank, Kotak Mahindra Bank and Bank of India have raised their rates.

On Tuesday, IDBI Bank announced an increase in interest rate up to 25 basis points on term deposits of below Rs 2 crore. The revised rates would be applicable from 15 June across various tenors for domestic term deposits, non-resident ordinary (NRO) and non-resident external (NRE) term deposits.