If you have a loan from Bank of Baroda or Canara Bank, there is an important update for you.
Both banks have increased their Marginal Cost of Funds Based Lending Rate (MCLR).
The revised rates came into effect on August 12, 2026.
The increase is limited to certain loan tenures and ranges from 5 to 10 basis points.
For borrowers whose loans are linked to MCLR, the change could mean higher interest costs and increased EMIs when their loan rate resets.
How Will the MCLR Hike Affect Borrowers?
The impact will mainly be felt by customers whose loans are directly linked to the MCLR.
When the applicable MCLR increases, the interest rate on such loans can also rise.
This may increase the EMI or extend the repayment burden, depending on the terms of the loan.
However, the increase will not automatically affect every customer of these banks.
The impact depends on whether the loan is linked to MCLR and which tenure is applicable.
What Is MCLR?
MCLR stands for Marginal Cost of Funds Based Lending Rate.
It is a benchmark used by banks to determine the minimum interest rate at which certain loans can be offered.
The Reserve Bank of India introduced the MCLR system in 2016.
Whenever the applicable MCLR changes, borrowers with MCLR-linked loans may see a change in their interest rate when their loan’s reset date arrives.
Canara Bank MCLR Rates Revised
Canara Bank has increased its MCLR by 5 basis points across several tenures.
The revised rates include:
1-month MCLR: Increased from 8.00% to 8.05%
3-month MCLR: Increased from 8.25% to 8.30%
6-month MCLR: Revised rate needs to be checked carefully, as the figures in the provided information appear inconsistent
1-year MCLR: Increased from 8.75% to 8.80%
2-year MCLR: Increased from 9.05% to 9.10%
Overall, Canara Bank’s revised MCLR range is reported at around 7.95% to 9.10%, depending on the applicable tenure.
Bank of Baroda MCLR Increased by 10 Basis Points
Bank of Baroda has made a more limited change to its MCLR.
The bank increased the MCLR for the 3-month tenure by 10 basis points, taking it to 8.20%.
The bank has not changed its MCLR for the 6-month and 1-year tenures under this revision.
For borrowers with MCLR-linked loans, it is important to check the applicable reset date and tenure before assuming that their EMI will immediately increase.
If your loan is linked to another benchmark, such as an external benchmark, this particular MCLR revision may not directly affect your interest rate.
