State Bank of India has raised its EBLR and RLLR by 25 basis points, leaving borrowers to choose between higher monthly instalments and longer repayment periods.
State Bank of India has lifted its external benchmark-linked lending rates by 25 basis points, a change that took effect on October 15 and is likely to feed through to some home loan borrowers through higher monthly payments or longer repayment periods. Business Today said the revision applies to SBI’s External Benchmark Linked Rate and Repo Linked Lending Rate, two benchmarks that matter because they are tied to the Reserve Bank of India’s policy rate and therefore move more quickly than older lending systems.
Under the RBI’s framework, External Benchmark Linked Rate, or EBLR, is a floating loan rate tied to an outside reference such as the repo rate or another benchmark set by the Financial Benchmarks India Private Ltd, with the final borrowing cost made up of that benchmark plus the bank’s spread. Repo Linked Lending Rate, or RLLR, is a more specific form of benchmark-based pricing, because it tracks the RBI’s repo rate directly. In practice, that means a change in monetary policy can show up in a borrower’s loan pricing more rapidly than under the earlier marginal cost-based system, which often took longer to reflect policy shifts, according to background explainers from EMI.me, The Credit Compass and Finnable.
For borrowers, the practical effect depends on the loan contract, the reset date and whether SBI adjusts the EMI or extends the tenure. Business Today said a ₹50 lakh loan with 20 years left would cost about ₹41,822 a month at 8 per cent, rising to roughly ₹42,603 if the rate climbed to 8.25 per cent and the repayment period stayed the same. That would mean an increase of about ₹781 a month. For many households, the more important question is not only the size of the rate change but how the bank applies it: a higher EMI preserves the original maturity date, while a longer tenure can ease near-term pressure but raise the total interest paid over the life of the loan.
The broader shift is part of a change the RBI pushed through in 2019, when it required floating-rate retail and small-business loans to be linked to external benchmarks. Supporters of the system say it improves transparency and makes rate cuts and hikes pass through more quickly to borrowers. Even so, the timing of the impact can vary, because benchmark-linked loans reset only on the schedule written into the agreement. That makes it important for borrowers to check their loan documents, outstanding balance and remaining tenure before deciding whether to absorb the change through a larger EMI or accept a longer repayment period.
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