Bank of Baroda and Indian Overseas Bank have raised their marginal cost of fund-based lending rates (MCLR), following in the footsteps of State Bank of India (SBI). This move will impact the interest rates of corporate buyers, and retail borrowers will not be impacted as home and car loans are linked to the external benchmark linked rates (EBLR), which remained unchanged in the latest hike by the two lenders.
The MCLR hike by the two banks was affected almost two months after the Reserve Bank of India raised repo rates by 25 basis points to 6.5% on February—the RBI Monetary Policy Committee’s sixth consecutive hike since May 2022. The RBI’s rate setting panel has increased the repurchase or repo rate cumulatively by 250 points since last year.
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Bank of Baroda, Indian Overseas Bank MCLR hike dates:
Effective February 12, BoB has increased its MCLR by 5 bps across all tenors. Meanwhile, IOB has raised its MCLR by up to 15 bps across all tenors.
According to the BoB website, the 1-year MCLR now stands at 8.55%, and the overnight, one-month, and three-month MCLRs were at 7.9, 8.2 and 8.3%, respectively.
SBI has also increased its lending rates by 10 bps across overnight and up to three-year loans. This increase varies from 7.95 per cent to 8.70 per cent and is effective from February 15.
Which banks have increased deposit rates?
The rate hikes by SBI, BoB, and IOB are applicable to loans linked to MCLR. BoB, IoB along with most other have banks have passed on the 250-bps hike by RBI since last May to their borrowers, but BoB and IoB have not yet increased deposit rates commensurately.SBI, however, increased deposit rates by 5-25 bps on February 15.
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According to SBI’s website, after the recent hike in deposit rates, senior citizens will get 8.5% on fixed deposits of 5-year tenure and above. Other depositors will get additional 5 bps on longer-term investment tenures. Savings bank depositors of India’s largest bank continue to get just 2.7% on deposits below Rs 10 crore, and those who have over Rs 10 crore in such accounts get 3%—the lowest deposit rate.
SBI raised its deposit rates and unveiled a new 400-day deposit scheme with an interest rate of 7.1% in December 2022, which is currently the best rate for the general public. Additionally, SBI increased its return rate to 6.8% for deposits between one year and less-than-two years, up from 6.75%. For the two- to three-year category, deposits now earn 7%, an increase from 6.75%. Deposits above three years now earn 6.5% interest, up from 6.25% previously.
BoB, IoB, SBI rate hike impact on home, car loans
Personal, auto, and home loans are linked to the external benchmark linked rates (EBLR) and are not affected by the MCLR rate hike.
This hike in lending rates will increase the borrowing cost for home and car loans, making them more expensive for customers.
