SBI MCLR January 2017 | Marginal Cost Lending Rate |

Checkout latest MCLR of SBI for 2017. The Full form of MCLR is Marginal Cost of Funds Lending Rate. SBI MCLR keeps changing from time to time and it is important to keep updated of the same. Below, we have provided MCLR of SBI for various periods such as One Month MCLR, Six Months MCLR etc. RBI introduced MCLR based loans to ensure quicker transmission of rate changes to loan borrowers. MCLR requirements will be applicable only to banks and not NBFC.

SBI MCLR 2017-2018 Marginal Cost Lending Rate

SBI MCLR Chart

Tenure MCLR Rate
Overnight 7.75%
1 Month 7.85%
3 Months 7.90%
6 Months 7.95%
1 Year 8.00%
2 Years 8.10%
3 Years 8.15%

What is SBI MCLR

MCLR is the rate comprising 4 Factors that contribute to its making:

  • Marginal Cost of Funds
  • Operational Costs of bank
  • Negative carry in maintaining CRR
  • Tenor Premium

Marginal cost funds is the cost of funds one incurred at the boundary. That is the cost of funds one encountered the last fund borrowed.

That is at the final condition not the initial condition. All marginals work at the last event. For example the rise in growth at the last financial year is the marginal growth of that year.

Suppose if I need funding for my company. I borrowed say 100 mn dollars. The cost of this fund say is ‘r’%, then this is the marginal cost of my financing. Suppose if one average all my financing and see how much my marginal funding has increased my overall average financing cost, then that is the marginal growth in my cost of funding.

SBI MCLR Example

Suppose SBI’s marginal cost of funds comes out to 6%, operating costs 1% , CRR maintenance: 1% and tenor premium 1% for one year.

Therefore if you take a loan for one year then the MCLR comes out to 9% + spread (if any).

Now suppose if any cut in the REPO rate happens, then this would cut the rate of marginal cost of funds. Bingo! Win for Dr. Rajan, benefit to the borrowers.

SBI MCLR Changes

The next set of changes in MCLR of SBI will likely come in mid next year. If you have found any errors in this Article on ‘SBI MCLR’, comment your thoughts below.