Borrowers may soon have to pay higher EMIs on their home, car, and personal loans. Several major banks, including HDFC Bank, have increased their Marginal Cost of Funds-Based Lending Rate (MCLR), which is used to determine interest rates on many floating-rate loans.
Even though the Reserve Bank of India (RBI) recently kept the repo rate unchanged at 5.25%, banks have raised lending rates due to higher funding costs.
HDFC Bank Raises MCLR
HDFC Bank, India’s largest private-sector lender, has increased its MCLR by 5 to 10 basis points across selected loan tenures.
The bank’s one-year MCLR, which is linked to most retail loans, has increased from 8.35% to 8.40%.
For two-year loans, the MCLR has gone up by 10 basis points and now stands at 8.55%.
Other Banks Also Increase Lending Rates
Several public-sector banks have also revised their MCLR rates.
Bank of Baroda
Bank of Baroda has increased lending rates across multiple loan tenures by 0.05%.
1-year MCLR: 8.70% to 8.75%
6-month MCLR: 8.45% to 8.50%
3-month MCLR: 8.15% to 8.20%
1-month MCLR: 7.90% to 7.95%
Overnight MCLR: 7.80% to 7.85%
Canara Bank
Canara Bank has also revised its rates upward after a recent review.
Overnight MCLR: 7.90% to 7.95%
1-month MCLR: 7.95% to 8.00%
3-month MCLR: 8.20% to 8.25%
6-month MCLR: 8.55% to 8.60%
Indian Bank and Bank of India
Indian Bank has raised its one-year MCLR by 10 basis points to 8.55%.
Bank of India has also increased its one-year MCLR, which now stands at 8.75%.
What It Means for Borrowers
Customers with home, car, or personal loans linked to MCLR-based floating interest rates may see their EMIs increase when their loan reset date arrives. In some cases, banks may extend the loan tenure instead of increasing the EMI amount.
The latest rate hikes will also make new home loans and personal loans more expensive, as borrowers will have to pay higher interest rates than before.
