Mumbai: Leading public-sector banks (PSBs) Bank of Baroda, Canara Bank, and UCO Bank have hiked their marginal cost of funds-based lending rate (MCLR) across tenures. The decision was taken after the Reserve Bank of India (RBI)’s rate-setting panel announced its monetary policy verdict, keeping the benchmark interest rates at 6.50 per cent for the ninth straight meeting.
Bank of Baroda has changed the MCLR effective from August 12 some tenures. The Asset Liability Management Committee (ALCO) of UCO Bank will hike the lending rate by five basis points (bps) for some tenures effective from August 10. Canara Bank will hike the lending rate by five bps across tenures from August 12.
Canara Bank: The benchmark one-year tenor MCLR, used to price most consumer loans such as auto and personal, will be at nine per cent against the earlier rate of 8.95 per cent. The three-year MCLR will be 9.40 per cent, while for two-year, it will be 9.30 per cent, up five bps.
Canara Bank’s one-month, three-month, and six-month tenor rates will be 8.35-8.80 per cent, and the MCLR on overnight tenor will be 8.25 per cent against 8.20 per cent. The new rates are effective August 12, 2024.
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UCO Bank: The Kolkata-based PSB hiked MCLR for the one-month tenor from 8.3 per cent to 8.35 per cent and the one-year MCLR from 8.9 per cent to 8.95 per cent. It revised TBLR for one month from 6.85 per cent to 6.7 per cent and TBLR for 12 months from 7.0 per cent to 6.9 per cent. The PSB reduced the Treasury bill benchmark linked rates by 5-15 basis points.
Bank of Baroda (BoB): The Mumbai-based PSB said it revised MCLR for the three-month tenor to 8.5 per cent from 8.45 per cent, and the six-month bucket to 8.75 per cent from 8.7 per cent. The revised MCLR for one-year loans will be 8.95 per cent, up from 8.9 per cent. BoB hiked the lending rate by five bps on three-month, six-month and one-year tenures from August 12.
With this latest hike in the marginal cost of funds-based lending rates (MCLR), EMIs will increase for borrowers. A basis point (bp) is a 100th of a percentage.
MCLR, which was introduced by the Reserve Bank of India (RBI) in 2016, is a benchmark interest rate set by the RBI that banks use to determine their lending rates. Banks cannot give loans below this rate. When MCLR increases, it leads to higher interest rates on loans linked to this rate, causing borrowers to face higher EMIs and increased overall borrowing costs.
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