Loan interest rate hikes: Two major banks, ICICI Bank and Punjab National Bank, have increased their Marginal Cost of Lending Rate (MCLR) by 5 basis points amid the backdrop of rising inflation. These new rates took effect from September 1, 2023.
This move will directly impact customers who have plans to secure car loans, education loans, personal loans, or home loans, either presently or in the future. It’s essential to understand that MCLR directly influences loan interest rates.
Read More: Term Insurance: What are the accident death benefits one can get under the plan?
ICICI Bank’s new rates:
India’s largest private sector bank, ICICI Bank, raised its MCLR by 5 basis points, affecting millions of its customers. Following this change, the bank’s overnight MCLR increased from 8.40 percent to 8.45 percent. Simultaneously, the one-month MCLR rose to 8.50 percent, three months MCLR to 8.85 percent, and one year MCLR to 8.95 percent.
Read More: Moody’s pegs India GDP growth for 2023 at 6.7 per cent
Punjab National bank’s new rates:
Punjab National Bank, the second-largest public sector bank, also increased its Marginal Cost of Lending Rate by 5 basis points. Consequently, the bank’s overnight MCLR surged from 8.10 percent to 8.15 percent. Furthermore, the one-month MCLR climbed from 8.20 percent to 8.25 percent, and the three-month MCLR increased from 8.30 percent to 8.35 percent.
Read More: RBI Governor Shaktikanta Das Expects Retail Inflation To Decline In September
Understanding MCLR:
The Marginal Cost of Funds Based Lending Rate (MCLR) serves as a fixed lending rate that banks use to determine the interest rates for car loans, home loans, education loans, and more. It sets a minimum rate below which banks cannot lend to customers. Any changes in MCLR rates by the bank directly affect the interest rates and Equated Monthly Installments (EMIs) for customers. Higher MCLR rates result in increased EMI burdens for customers.
