Interest Rate Hike: There is an increase in interest rates by government banks which will have a direct impact on those people especially those who have EMI based loans. Let us know how much the interest rates have increased.
The Reserve Bank of India did not make any change in the interest rates in the credit policy on Thursday, yet some banks have increased the MCLR loan rates. Many public sector banks including Bank of Baroda (BoB) and Canara Bank have increased the MCLR loan rate by up to 0.10 percent. However, the Reserve Bank of India did not make any changes in its credit policy on Thursday, keeping the repo rate at 6.50 percent.
With this move of banks, the monthly installment (EMI) linked to MCLR will increase. Because, the EMI on the term loan linked to the benchmark rates related to it is also likely to increase. Let’s know for whom the EMI of home and personal loan will increase.
Which banks increased MCLR
In simple words, MCLR is the minimum interest rate that banks have to charge for a specific loan. Giving information, Bank of Baroda said that the one-year MCLR rate has been revised to 8.70 percent. It is now 8.65 percent. The new rates will be effective from August 12. Canara Bank has also increased the MCLR by 0.05 percent. It has now increased to 8.70 percent. Another public sector Bank of Maharashtra has increased MCLR by 0.10 percent.
Which borrowers are affected by the increase in MCLR?
MCLR hike by various banks will affect only those customers whose interest rates are still based on MCLR. In fact, from October 1, 2019, banks have been given the freedom to link the interest rates on their loans to external benchmarks. Therefore, it will not have any effect on the customers taking repo rate based loans, that is, their loan EMI will not increase.
After the increase in the benchmark rates of Bank of Baroda (BoB), the fund based loan rate i.e. MCLR rate increased to 8% for overnight tenure. Whereas, the MCLR rate for one year tenure has increased to 8.70%. The MCLR is 8.25% for one month tenure, 8.35% for three months and 8.45% for 6 months tenure.
