Canara Bank has made a minor change to its lending rates. The bank has informed the stock exchanges that its Marginal Cost of Funds Based Lending Rate (MCLR) has changed. These new rates will be effective from February 12, 2026.
MCLR is the minimum interest rate below which a bank cannot lend. The RBI created it to ensure that interest rate changes are passed on to customers quickly and transparently.
Canara Bank has reduced only the short-term MCLR, while keeping other long-term rates unchanged.
Importantly, the overnight MCLR has been reduced from 7.90 percent to 7.85 percent, representing a 5 basis point decrease.
Similarly, the one-month MCLR has been reduced from 7.95 percent to 7.90 percent, also a 5 basis point decrease.
The three-month MCLR will remain at 8.15 percent. The six-month MCLR will remain unchanged at 8.50 percent, the one-year MCLR at 8.70 percent, the two-year MCLR at 8.85 percent, and the three-year MCLR at 8.90 percent.
This change is significant because many types of loans, such as home loans, car loans, and personal loans, are linked to a bank’s MCLR. Especially those loans that are reviewed for a shorter period or new borrowers may benefit slightly.
The reduction in overnight and one-month rates will slightly reduce borrowing costs. While this reduction isn’t significant, just 5 basis points, or 0.05 percent, it’s still good news for customers.
This move comes amid rising demand for credit. Both retail and wholesale loans are experiencing strong demand.
The RBI also wants the impact of interest rate cuts to be felt quickly. Therefore, the bank has supported this by lowering short-term rates.
Canara Bank has officially provided this information to the stock exchange so that everyone is aware of it. This announcement by the bank is important for both investors and customers.
If you have or are considering a loan from Canara Bank, this change could be beneficial for you, especially if your loan is linked to the MCLR.
The bank did not change long-term rates because the cost of funds or other factors may not have changed significantly.
Customers are advised to check their loan documents to see which tenor’s MCLR their loan is linked to. If it is for a shorter term, the benefits will be realized sooner.
