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Bank Of Baroda And Canara Bank MCLR Rate Hike | There is an important news for the customers taking home loan, car loan or personal loan. Two major state-owned banks in the country, Bank of Baroda and Canara Bank, have decided to increase the interest rates on their loans. Both the banks have announced an increase in Marginal Cost of Funds Based Lending Rate (MCLR) by 5 basis points i.e. 0.05 percent. These new rates are effective from June 12. Hence, MCLR based home loans, car loans and other loans are now going to be slightly more expensive than before.

Interestingly, the Reserve Bank of India kept the repo rate unchanged at 5.25 percent in the recent policy meeting. But after just a few days, the borrowers have suffered a big blow as both public sector banks Bank of Baroda and Canara Bank have decided to increase the interest rates on loans.

MCLR is the minimum interest rate that a bank can charge while lending to customers. This rate is determined by considering the bank’s cost of raising funds, interest on deposits and other financial factors. As many home loans and retail loans are linked to the MCLR, this rate hike can have a direct impact on the loan EMI. Bank Of Baroda And Canara Bank MCLR Rate Hike

Bank of Baroda has cut overnight MCLR from 7.80 per cent to 7.85 per cent, one-month MCLR from 7.90 per cent to 7.95 per cent, three-month MCLR from 8.15 per cent to 8.20 per cent and six-month MCLR from 8.45 per cent to 8.50 per cent. Apart from this, the one-year MCLR, which is considered the basis for many home loans, has been increased from 8.70 per cent to 8.75 per cent.

On the other hand, Canara Bank has also increased interest rates for short-term loans. Canara Bank’s overnight MCLR has been raised from 7.90 per cent to 7.95 per cent, one-month MCLR from 7.95 per cent to 8 per cent, three-month MCLR from 8.20 per cent to 8.25 per cent and six-month MCLR from 8.55 per cent to 8.60 per cent. However, the bank has maintained the rates for other long-term terms. Bank Of Baroda And Canara Bank MCLR Rate Hike

Although this increase in interest rate is not huge, its effect can be felt on long term and large amount loans. Especially customers whose loans are based on MCLR are likely to see an increase in their EMIs.