If you are planning to take a home loan, car loan, or personal loan, this update is important for you.
Due to rising inflation and changes in the banking sector, Canara Bank has increased its lending interest rates. Because of this change, many borrowers may have to pay higher monthly EMIs.
The new interest rates came into effect on March 12, and this change could affect the EMIs of millions of customers who have loans linked to the bank’s lending rate.
MCLR Increased by 10 Basis Points
Canara Bank has increased its Marginal Cost of Funds Based Lending Rate (MCLR) by 10 basis points (0.10%). MCLR is the minimum interest rate at which banks provide loans to their customers.
When the MCLR increases, the interest rates on many types of loans also rise. As a result, loans such as home loans, personal loans,
and business loans become more expensive, leading to higher EMIs for borrowers.
New Lending Rates Explained
The bank has mainly increased the rates for long-term loans. The revised rates are:
2-year MCLR: Earlier 8.85%, now increased to 8.95%
3-year MCLR: Earlier 8.90%, now increased to 9.00%
However, there is some relief for borrowers with short-term loans. The bank has not changed the short-term rates (overnight to 1 year) for now.
Who Will Be Affected the Most?
This decision by Canara Bank will mainly affect customers who have taken home loans, personal loans, or business loans.
Existing customers: If their loans are linked to MCLR and their reset period is approaching, their EMIs may increase soon.
New customers: People who take new loans from the bank will now get them at higher interest rates than before.
How Much Can Your EMI Increase?
For example, if someone has taken a ₹50 lakh home loan for 15 years, a 0.10% increase in interest rate could raise the monthly EMI by around ₹300 to ₹500.
While this increase may seem small at first, over the entire loan period it can add up to thousands of rupees in extra payments.
