If you have a loan with Bank of Baroda or Canara Bank, or are planning to take a new loan from either of these banks, this news is important for you.
Both public sector banks have increased their MCLR (Marginal Cost of Funds Based Lending Rate) for select tenors.
The new MCLR rates will be effective from August 12, 2026. This change could affect the interest rates and EMIs of loans linked to the MCLR.
The change comes after the Reserve Bank of India kept the repo rate unchanged at 5.25% during the Monetary Policy Committee (MPC) meeting held on August 5, 2026.
About a week later, both banks revised their MCLR for selected tenors.
Canara Bank Increases MCLR by 5 Basis Points
Canara Bank has increased its MCLR by 5 basis points for select tenors. One basis point is equal to 0.01 percent.
The bank’s new MCLR rates range from 7.95% to 9.10%, depending on the loan tenor. The overnight MCLR has remained unchanged at 7.95%.
The one-month MCLR has increased from 8% to 8.05%, while the three-month MCLR has increased from 8.25% to 8.30%. The six-month MCLR has also increased from 8.60% to 8.65%.
The one-year MCLR has increased from 8.75% to 8.80%. The two-year and three-year MCLR rates have increased to 9.05% and 9.10%, respectively.
Image Source: Official Website
Bank of Baroda Hikes MCLR by 10 Basis Points
Bank of Baroda has also increased its MCLR for one selected tenor. The bank has raised the three-month MCLR by 10 basis points, from 8.20% to 8.30%.
However, the overnight MCLR remains unchanged at 7.85%, while the one-month MCLR remains at 7.95%. The six-month and one-year MCLR have also been kept unchanged at 8.50% and 8.75%, respectively.
The bank’s MCLR rates now range from 7.85% to 8.75%, depending on the tenor.
What is MCLR?
MCLR stands for Marginal Cost of Funds Based Lending Rate. In simple terms, it is the minimum interest rate below which a bank generally cannot provide a loan under normal circumstances.
The Reserve Bank of India introduced the MCLR system in 2016. For customers whose loans are linked to MCLR, any change in the benchmark rate can increase or decrease the cost of the loan.
A change in the MCLR can affect the loan EMI or the loan repayment period. However, the actual impact depends on the type of loan, its interest reset date, and the terms and conditions of the bank.
How Will Customers Be Affected?
The MCLR increase is mainly important for customers whose home loans, personal loans, or other loans are linked to this benchmark.
If the interest rate on such a loan is revised after the reset date, the interest burden could increase. This may result in a higher EMI or a longer loan repayment period, depending on the terms of the loan.
