Union Bank Of India And Bank of Baroda raised its marginal cost of funds based lending rates (MCLR) on loans. While Bank of Baroda has increased its MCLR by 10-15 basis points across tenures, Union Bank of India has increased it by 30 bps across tenures. The increase in MCLR will increase the EMI of existing borrowers as well as new borrowers.
The move comes as the RBI is increasing key interest rates to control inflation. The RBI has increased by 190 basis points since May this year. In May, the central bank conducted its off-cycle monetary policy review to increase the repo rate to control inflation. It had increased by 40 basis points in the review.
According to the Bank of Baroda website, the bank’s benchmark one-year MCLR has now increased from 7.95 per cent to 8.05 per cent. The new rates are effective from November 12. Its overnight MCLR has been increased by 15 bps to 7.25 per cent. One month MCLR has increased from 7.60 per cent to 7.70 per cent. The three-month and six-month MCLR have increased by 10 bps per cent each to 7.75 per cent and 7.95 per cent, respectively.
In the case of Union Bank of India, the revised interest rates are effective from November 11, 2022 to December 10, 2022, according to its website. The overnight rate MCLR of the bank has now increased from 7.15 per cent to 7.45 per cent. Its one month, three month and six month rates now stand at 7.60 per cent, 7.80 per cent and 8 per cent respectively. The one-year MCLR, two-year MCLR and three-year MCLR are 8.20 per cent, 8.40 per cent and 8.55 per cent respectively.
India’s retail inflation hit a five-month high of 7.41 per cent in September. This was the ninth month that consumer price index (CPI)-based inflation has remained above the RBI’s upper tolerance limit of 6 per cent, and has risen despite the central bank’s efforts to contain it. Retail inflation was 7.04 percent in May, 7.01 percent in June, 6.71 percent in July, 7 percent in August and now 7.41 percent in September.
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