Rate cut or pricier deposits, SBI can protect NIM: Setty
State Bank of India (SBI) has a 35-basis-point cushion on its benchmark marginal cost of funds-based lending rate (MCLR) that it can choose to pass on to borrowers if deposit rates harden further, Chairman CS Setty told analysts in a post-earnings call.
One basis point is a hundredth of a percentage point.
India's largest lender has hiked its MCLR by 30 basis points in the first half of this fiscal, responding to higher costs of deposits. The last hike by the bank was effective from October 15. The bank's one-year MCLR rate is currently at 8.95%. One basis point is 0.01 percentage point.
MCLR is the minimum rate a bank can lend at particularly to corporate borrowers. It is calculated based on the cost of funds for every bank. SBI being the largest bank in the country, its MCLR is considered a benchmark for large loan corporate loan deals.
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