Private sector lender ICICI Bank has once again raised its marginal cost based lending rate (MCLR) by 10 basis points, which would make the loans more expensive. The hike is applicable to all loan products and rates are applicable from September 1, 2022. This is for the fourth time in four months that ICICI Bank has increased its MCLR. Earlier, the rates were revised in June, July and August. In August, the bank had revised its rates by 15 bps.
New rates
The ICICI Bank website says that the overnight and one-month MCLR rate has been increased from 7.65 per cent to 7.75 per cent. For three months, the rate has been revised to 7.80 per cent, while for six months, the new rates are 7.95 per cent. The one-year MCLR rate has been revised to 8.00 per cent.
| Tenures | MCLR |
| Overnight | 7.75% |
| One Month | 7.75% |
| Three months | 7.80% |
| Six months | 7.95% |
| One year | 8.00% |
On its website, ICICI Bank has explained that the marginal cost of funds-based lending rate (MCLR) is an internal reference rate fixed by the Reserve Bank of India, which helps banks to define the minimum interest rate on different types of loans.
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In the last one year, ICICI Bank has revised its MCLR a couple of times. In August, it was 7.90 per cent; in July, it was 7.75 per cent; while in June, it was 7.55 per cent.
The RBI had hiked its repo rate by 50 bps to 5.40 per cent in August to tame the rising CPI inflation, following that most private and public lenders in the country have tweaked their loan rates.
As per the rules, when the central bank goes for a repo rate revision, it increases the cost of funds for banks and other lenders. When there is a rate hike, the bank has to pay more for the money they borrow from RBI.
Therefore, in return, banks increase their own interest rates on loans, making the equated monthly installments (EMIs) costlier for the customers. These rates are applicable to both new and existing borrowers.
