Private sector bank, Bank of Baroda recently announced an increase in the interest rate on loans that is based on the Marginal Cost of Fund Based Lending Rate (MCLR). This hike follows a 0.25 percent repo rate increase by India’s central bank, the Reserve Bank of India (RBI). The bank’s official website will be updated with the new interest rate when it goes into effect on February 12, 2023.
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For all tenures, the MCLR has been raised by 5 basis points. The bank’s overnight MCLR rate increased from 7.85 to 7.90 percent, while the rate for loans with a one-month duration increased from 8.15 to 8.20 percent. The six-month tenure has increased from 8.40 percent to 8.55 percent, and the three-month MCLR has gone from 8.25 percent to 8.30 percent. The one-year MCLR has increased to 8.55 per cent.
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Corporate borrowers as well as retail lending, such as home loans, personal loans, and SMEs, are predicted to be significantly impacted by the increase in MCLR. Equated Monthly Installments (EMIs) will rise as a result of the impact on loans linked to external benchmarks.
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The RBI has increased the repo rate for the sixth time in the country. The rate at which the central bank lends money to other banks is known as the repo rate, and it is at 6.50 percent. This hike in the repo rate is probably going to lead to other banks raising their loan interest rates, which would directly impact borrowers.
