Loans to cost more as Bank of Baroda hikes lending rate ahead of RBI monetary policy
Bank of Baroda, SBI, PNB, ICICI Bank and Union Bank are among lenders which have raised interest rains for loans ahead of the RBI monetary policy decision.Updated: Jun 05, 2018 18:19 IST
State-owned Bank of Baroda on Tuesday raised its benchmark lending rate by 5 basis points across tenures, joining other leading banks like ICICI Bank, SBI, and PNB which raised interest rates on loans last week.
The decision to raise lending rate comes a day before the bi-monthly monetary policy announcement of the Reserve Bank of India indicating pressure on interest rate to move upward.
The marginal cost of funds-based lending rate (MCLR) has been reviewed at 5 basis points above existing level with effect from June 7, BoB said in a statement.
The bank’s 1-year MCLR will be 8.45%, which is competitive as per the current market scenario, it said.
For all other tenors - overnight, one month, three months and six months - rates will be 7.95%, 8%, 8.1% and 8.3%, respectively.
The increase is attributed to higher cost of funds, and the rising interest rate scenario. Several banks including SBI, ICICI, PNB and Union Bank have raised their MCLR.
Last week, three major banks SBI, PNB and ICICI Bank increased their MCLR by up to 0.1%, making loans costlier for consumers.
All loans linked to MCLR will become costlier. Most of home and auto loans are linked to MCLR.
BoB said it does not add any mark-up on its MCLR for its best rated home loan borrowers.
The bank offers home loans at one-year MCLR to its best-rated customers, it said, adding, one-year MCLR is applicable irrespective of the total home loan amount and is available for a tenure up to 30 years.