• UGI USER
  • Jul 16, 2024
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SBI AND BOB RAISE MCLR, BORROWERS’ EMIS LIKELY TO INCREASE

Why in the news?

  • State Bank of India (SBI) and Bank of Baroda (BoB) increased their marginal cost of funds-based lending rates (MCLR).
  • SBI raised MCLRs by 5-10 basis points across various tenors, with the one-month MCLR up to 8.35% and the one-year MCLR to 8.85%.
source:toppersnotes

About Marginal Cost of Funds based Lending Rate(MCLR):

  • Definition: MCLR is the minimum rate below which banks can’t lend, introduced by RBI on April 1, 2016.
  • Calculation: Based on marginal cost of funds, cash reserve ratio, operating costs, and tenor premium.
  • Review: Banks review and publish MCLRs monthly.
What is Cash Reserve Ratio?

  • Definition: CRR is the percentage of a bank’s total deposits maintained as liquid cash with the RBI.
  • Purpose: Banks cannot earn interest or use this cash for investments or lending.

Key Facts about Bank of Baroda (BoB):

  • Headquartered: in Vadodara, Gujarat, is India’s third-largest public sector bank.
  • History: Founded by Maharaja Sayajirao Gaekwad III in 1908, nationalised in 1969.
  • Ranking: Ranked 586 on the Forbes Global 2000 list in 2023.

Key Facts about State Bank of India(SBI):

  • SBI: India’s largest public sector bank, globally 43rd largest, based in Mumbai.
  • History: Originated from Bank of Calcutta (1806), formed through numerous acquisitions and mergers.
  • Governance: Governed by the Indian government, Parliament, and authorities under Article 12 of the Constitution.

Associated Aritcle:

https://universalinstitutions.com/14989-2/