Bank of Baroda, a public sector bank, has caught its home loan customers by surprise with a sudden increase in its benchmark lending rate.
On August 12th, the bank raised its MCLR (Marginal Cost of Funds Based Lending Rate) by 5 basis points (BPS).
This move is set to impact customers with home loans, car loans, and personal loans, causing their EMIs to rise.
New loan applicants will also face higher interest rates.
This decision follows the Reserve Bank of India’s (RBI) choice to maintain the key interest rates, including the repo rate, for the third consecutive time on August 11th.
New Interest Rates by Bank of Baroda
Bank of Baroda has revised its interest rates, including the overnight interest rate which has increased from 7.95% to 8%.
Additionally, the MCLR for one month, three months, and six months has been adjusted to 8.25%, 8.35%, and 8.45% respectively. The bank’s one-year benchmark MCLR will now stand at 8.7%.
Impact on Loans
MCLR serves as the minimum interest rate for various loans such as auto loans, personal loans, and home loans.
It is influenced by factors like time, deposit rates, operating costs, and the repo rate.
Given these elements, any alteration in the repo rate automatically impacts the MCLR rate.
Borrowers from banks linked to MCLR will experience changes in their loan interest rates accordingly.
RBI’s Unchanged Stance
During the recent monetary policy review on August 10th, the RBI MPC (Monetary Policy Committee) unanimously decided to maintain the repo rate at 6.5%.
This consistent approach marks the third consecutive instance of the central bank keeping key interest rates stable.
