State Bank of India (SBI) is the latest to join a long list of banks who have lifted their lending rates, raising concerns among borrowers that loans would get costlier as the Reserve Bank of India (RBI) sets out to tame inflation.

The country’s largest bank has hiked its marginal cost of funds-based lending rate (MCLR) by 10 basis points across tenures. This is SBI's second hike in the benchmark lending rates in two months, raising the cost by 0.2%.

There could be more such hikes from commercial banks as the RBI is expected to come out with a series of rate increases during the course of the year to moderate retail inflation, which has already galloped to eight-year high of 7.79% in April. 

Banks raising their rates include ICICI Bank, Bank of Baroda, Central Bank, Punjab National Bank (PNB) and Bank of Maharashtra.

Earlier this month, RBI raised the policy repo rate by 40 basis points to 4.40% while stating that the cash reserve ratio (CRR) would be hiked by 50 basis points to 4.50% from 21 May. Experts expect the RBI to further raise the repo rate in its bi-monthly monetary policy next month.

SBI has revised the MCLR from 15 May, with the one-year tenure climbing to 7.20% from the previous 7.10%. Similarly, the MCLR for other tenures has risen by 10 basis points, with that of two years being raised to 7.40% and three years increasing to 7.50%.

MCLR for six months is increased to 7.15% (from 7.05%). A three-month MCLR is raised to 6.85% and one month and overnight tenure has been hiked to 6.85%.

Last month, SBI raised the MCLR  benchmark by 10 basis points even before the RBI announced its surprise hike in the key policy repo rate of 40 basis points.

MCLR is the benchmark rate below which banks are not allowed to lend. Most of the loans are linked to the one-year MCLR rate.