{"id":30868,"date":"2018-10-27T11:13:01","date_gmt":"2018-10-27T05:43:01","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=30868"},"modified":"2018-10-27T11:13:01","modified_gmt":"2018-10-27T05:43:01","slug":"borrowing-terms","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/borrowing-terms\/","title":{"rendered":"Borrowing terms"},"content":{"rendered":"<p><a href=\"http:\/\/indianexpress.com\/article\/opinion\/editorials\/state-bank-of-india-sbi-lending-rate-borrowing-terms-rbi-5085958\/\"><b>Borrowing terms<\/b><\/a><\/p>\n<p><b>Context:<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The State Bank of India (SBI) has raised its one-year MCLR or marginal cost of funds-based lending rate from 7.95 per cent to 8.15 per cent, while hiking similarly for two- and three-year loans.<\/span><\/li>\n<\/ul>\n<p><b>Background:<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The increase in MCLRs comes in the wake of <\/span><b>rise in deposit rates.<\/b><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">SBI revised its upward retail term deposit rates by 0.15-50 percentage points.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Also, since September 2017, yields on 10-year Indian government bonds effectively the interest on the sovereign\u2019s borrowings have gone up from around 6.5 per cent to 7.75 per cent.<\/span><\/li>\n<\/ul>\n<p><b>Impact of the decision:<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The <\/span><b>interest rate cycle has turned<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">It is an <\/span><b>end to the ultra-low interest rates,<\/b><span style=\"font-weight: 400;\"> resulting from the monetary stimulus measures unveiled by major central banks in response to the 2008 global financial crisis.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">It is to be noted that such low rates for borrowers were <\/span><b>neither sustainable nor fair to savers, especially fixed income earners.<\/b><\/li>\n<\/ul>\n<p><b>Impacts of higher interest rates:<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><b>Higher interest rates aren\u2019t favourable for the economy<\/b><span style=\"font-weight: 400;\">, just when it seems to be on the recovery path.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Together with rising oil prices, they could <\/span><b>potentially squeeze profit margins and hurt consumer sentiment.<\/b><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Also, there is <\/span><b>clear evidence of a revival in bank credit demand.<\/b><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">This is where <\/span><b>fiscal slippages and election-time populism <\/b><span style=\"font-weight: 400;\">on minimum support prices can really hurt.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">By crowding out private sector borrowings and forcing the RBI to counter food inflation by tightening monetary policy, there is the<\/span><b> danger of interest rates increasing more than what\u2019s warranted.<\/b><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Borrowing terms Context: The State Bank of India (SBI) has raised its one-year MCLR or marginal cost of funds-based lending rate from 7.95 per cent to 8.15 per cent, while hiking similarly for two- and three-year loans. Background: The increase in MCLRs comes in the wake of rise in deposit rates. SBI revised its upward&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/borrowing-terms\/\">Continue reading <span class=\"screen-reader-text\">Borrowing terms<\/span><\/a><\/p>\n","protected":false},"author":61,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[555],"tags":[],"class_list":["post-30868","post","type-post","status-publish","format-standard","hentry","category-test-1","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704956853},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/30868","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/61"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=30868"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/30868\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=30868"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=30868"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=30868"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}