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New Delhi: The equated monthly instalments (EMIs) which have already increased significantly since May, will go up further as three of the major banks have increased the interest rates on home loans of almost all tenures. As per the official information from the banks, ICICI Bank, Punjab National and Bank of India have revised their marginal cost-based lending rate (MCLR) on loans. According to bank websites, the new interest rates have been made effective from 1 August 2023.
Marginal Cost of Funds based Lending Rate (MCLR) is the minimum lending rate below which a financial institution will not give any loan.
The MCLR is revised every month, taking into consideration the repo rate and other rates related to borrowing. The MCLR was created by the Reserve Bank of India (RBI) as an alternative to the base rate system. The bank cannot lend below this rate. The MCLR varies with tenor and might range from overnight to three years.
ICICI Bank has increased MCLR by 5 bps for all tenures. According to the website of ICICI Bank, overnight, the one-month MCLR rate has been increased from 8.35 percent to 8.40 per cent. Three months, six months MCLR in ICICI Bank has been increased to 8.45 percent and 8.80 per cent respectively. At the same time, the one-year MCLR rate has been increased from 8.85 per cent to 8.90 per cent.
According to PNB Bank’s website, the overnight MCLR has been kept at 8.10 per cent. At the same time, the MCLR rate on one month’s tenure is 8.20 per cent. Three months, six months MCLR in PNB is 8.30 percent and 8.50 per cent respectively. Whereas, the MCLR for one year is now 8.60 per cent and for three years is 8.90 per cent.
According to the Bank of India website, the MCLR for overnight tenure is 7.95 per cent, the MCLR rate for one month is 8.15 per cent. Bank of India has kept three months, six months MCLR rate at 8.30 per cent and 8.50 per cent respectively. At the same time, MCLR has now been fixed at 8.70 per cent for one year and 8.90 per cent for three years.
The Reserve Bank of India’s (RBI) monetary policy committee (MPC) in its June MPC decided to keep the repo rate unchanged at 6.5%. Since May 2022, the repo rate has already been increased by a total of 250 basis points in an effort to bring down inflation.
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