HDFC Bank, the country’s largest private sector bank, recently increased its marginal cost of funds-based lending rate (MCLR) by 5-10 basis points. As a result, the one-year MCLR – to which most retail loans are linked – has increased from 8.35% to 8.40%. Similarly, the rate for loans with a tenure of two years has seen the biggest increase of 10 basis points, taking it to 8.55%.
It is worth noting that even though the Reserve Bank of India (RBI) has recently kept the repo rate unchanged at 5.25%, banks have increased their MCLR due to funding cost pressure. This step will directly impact the monthly EMI of home, car and personal loan customers.
**Other banks that have increased interest rates:**
**Bank of Baroda:** This public sector bank has changed its interest rates and implemented a new rate slab. Under this change, interest rates for loans of five different tenures have been increased by 0.05%. The one-year MCLR has been increased from 8.70% to 8.75% and the six-month MCLR has been increased from 8.45% to 8.50%. The three-month MCLR has been increased to 8.20% from earlier 8.15%. Similarly, MCLR for periods of one month and one day has been increased to 7.95% and 7.85% respectively.
**Canara Bank:** Canara Bank has also increased interest rates after the recent monetary review. Its one day MCLR has been increased from 7.90% to 7.95%. One month MCLR has been increased from 7.95% to 8.00% and three month MCLR has been increased from 8.20% to 8.25%. The six-month rate has been increased from 8.55% to 8.60%. Indian Bank – Indian Bank has increased its 1-year MCLR by 10 basis points to 8.55% (earlier 8.75%).
Bank of India – Bank of India has also fixed its 1-year MCLR at 8.75%.
impact on customers
If your existing home or car loan is based on MCLR-linked floating rate, your monthly EMI will increase once the loan reset date arrives or the loan tenure will increase. Due to this move by banks, new customers will now be offered personal loans or home loans at higher interest rates than before.
