Due to this increase, home, car and other loans are expected to become more expensive.
According to the SBI website, the overnight, one-month, three-month and six-month MCLR rates were all increased by 10 basis points to 6.75%, 6.75%, 6.75% and 7.05%, respectively. Similarly, the MCLR for a duration of one year amounts to 7.10%, two years to 7.30% and three years to 7.40%.
Last week, the Bank of Baroda (BoB) announced a 0.05% increase in the marginal cost of interest rates on fund-based loans, effective April 12, 2022. This was announced by the BoB through regulatory filing with stock exchanges.
What is MLCR?
The marginal cost of funds (MCLR) based lending rate has replaced the base rate as per the new RBI guideline for commercial banks to set lending rates.
The marginal cost of funds is an important factor in determining the MCLR. Any change in key rates, such as the repo rate, which affects the marginal cost of funds, will have an effect on the MCLR. When their home loan reset date arrives, the increase in MCLR will show up in their EMIs.
The Reserve Bank of India (RBI) kept its policy rates unchanged at its monetary policy meeting on April 8, 2022.
