The benchmark lending rates at Bank of Baroda (BoB) were increased across all tenures by 5 basis points (bps). The new rates are effective from August 12, 2023. This move came just one day after the RBI announced a status quo on the repo rate.
Post the hike, the new MCLR rate for overnight and one-year tenure is 8% and 8.70% respectively. The MCLR lending rate for other tenures has been kept unchanged.
Latest Bank of Baroda MCLR
The bank’s overnight marginal cost of funds-based lending rate (MCLR) will be 8% as of August 12.For one-month, three-month, and six-month terms, BoB applies 8.25%, 8.35%, and 8.45% MCLR, accordingly.
Bank of Baroda MCLR | ||
MCLR Tenors | Existing MCLR (%) | MCLR w.e.f. 12th August 2023 (%) |
Overnight | 7.95 | 8 |
One Month | 8.2 | 8.25 |
Three Month | 8.3 | 8.35 |
Six Month | 8.4 | 8.45 |
One Year | 8.65 | 8.7 |
Source: BoB BSE filing
Which loan borrowers will be impacted by the MCLR hike?
The only bank customers who will be impacted are those whose interest rates are still based on the MCLR. From October 1, 2019, the banks must link the interest rates on their loans to an external benchmark, such as the repo rate, a three- or six-month Treasury bill, or another.
How EMIs are set under MCLR-linked interest rates?
The EMIs will be determined on the reset date specified in the loan agreement if a loan is tied to the MCLR-based lending regime. The bank will verify the most recent MCLR rate for the tenure to which the loan is tied on the reset date under the MCLR-based lending regime. The spread or markup will be added to the most recent MCLR rate to determine the new interest rate. The bank will base its calculation of the borrower’s EMI on the amount of the outstanding loan at the new MCLR-linked interest rate.Other banks that have hiked MCLR
Since the start of August few banks have hiked MCLR on loans. HDFC Bank has increased the benchmark marginal cost of funds-based lending rates (MCLR) by up to 15 basis points on select tenures. Bank of India has revised MCLR and has hiked rates on select tenors.