Canara Bank hikes MCLR by 0.15%; EMIs to go up for new, existing customers

State-owned Canara Bank said it has increased its marginal cost-based lending rate (MCLR) by up to 0.15 per cent, which will make the loans from the bank more expensive. 

In a regulatory filing, the bank noted that the new marginal cost of funds-based lending rate (MCLR) across various tenors will be effective from September 7 (Wednesday).  The benchmark lending rate is used to tweak most consumer loans, such as personal loans, auto loans and home loans. 

As per the filing, the existing lending rate, which is 7.65 per cent, has been raised to 7.75 per cent. The bank has revised both overnight and one-month tenor MCLRs and has tweaked them by 0.10 per cent. The rate for the three-month maturity bucket has been increased by 0.15 per cent or 15 basis points to 7.25 per cent. 

The revised rates, effective from September 7, are as follows: 
 

MCLR for six months has been hiked from 7.60% to 7.65%, a 5 basis point increase. The one-year MCLR rate has been increased by 10 basis points to 7.75% from 7.65%. The rates are applicable to both new and existing borrowers. 

The Canara Bank has raised its lending rate after the Reserve Bank of India raised its key repo rate last month. Earlier this month, ICICI Bank, Karnataka Bank, and Bandhan Bank increased their lending rates. 
While ICICI Bank and Karnataka Bank hiked their MCLR by 10 bps across tenors, private sector lender Bandhan Bank increased its MCLR by 41-65 bps across tenors. 

In layman’s terms, when RBI goes for a repo rate revision it increases the cost of funds for banks and other lenders. When there is a rate hike, banks have to pay more for the money they borrow from RBI. In return, banks increase their own interest rates on various loans, making the equated monthly installments (EMIs) costlier for the customers. 

(With agency inputs)