the countrys largest bank state bank of india sbi has hiked its effective mclr by 010 across all tenures with effect from june 1 2018 an increase in mclr would normally translate into increase in interest payable by borrowers unless the bank reduces its margin on loans to absorb this increase mclr stands for marginal cost of lending rate which is the main determinant of cost of a loan for borrowersthe hike has come just a couple of days before reserve bank of india rbi is to announce bimonthly monetary policy on june 6 2018this is the second hike in mclr by sbi this year as the countrys largest lender has already increased mclr in march 2018 the increase in march was a change in trend as it was the first hike since 2016according to the banks website mclr effective from june 1 2018 will be as follows the equated monthly instalment emi payable by borrowers comprises loan repayment plus interest payable on the loan if interest rate on the loan goes up emis automatically increase unless bank reduces its markup margin in loans it is important to note that the hike in mclr has come just after sbi announced the hike in fixed deposit rates for select tenuresclearly new home loan borrowers hoping for some reduction in interest rates and thereby in their emi burden need not to wait anymorefor existing borrowers the hike in mclr will impact their emis when the reset dates arrive for their loans the reset date is set by between the bank and the borrowers as per the loan agreement which is usually 6 months or one year the future emis till next reset date are calculated on the basis of the mclr rate plus margin effective on the reset dateaccording to rbis mandate all loans including home loans taken after april 1 2016 are to be linked with mclr the banks are free to ask for a markup over and above the mclr however the rate charged on the loans cannot be less than the mclr