Bank Of Baroda Raises MCLR, EMIs On Loans To Increase

Bank of Baroda, a government-owned bank, has raised its benchmark lending rates by 5 basis points (bps) across various tenures, effective from 12 August. This adjustment will result in higher EMIs for home loans, personal loans, and other types of loans. The decision came shortly after the Reserve Bank of India (RBI) opted to keep its key interest rates unchanged on 11 August, marking the third consecutive instance of no change.

Bank of Baroda's marginal cost of funds-based lending rate (MCLR) for overnight tenure has been increased to 7.95 per cent, effective from 12 August. Furthermore, the MCLRs for one-month, three-month, and six-month periods have been elevated to 8.20 per cent, 8.30 per cent, and 8.40 per cent, respectively. The bank's benchmark one-year MCLR will now stand at 8.65 per cent.

MCLR serves as the minimum interest rate applied to various consumer loans, including personal, auto, and home loans. When determining lending rates, factors like deposit rates, operating costs, repo rates, and maintaining the cash reserve ratio are taken into account.

Only borrowers with loan interest rates linked to MCLR will be affected by changes in the repo rate.

In its recent monetary policy review on 10 August, the RBI's Monetary Policy Committee (MPC) unanimously decided to maintain the key repo rate at 6.5 per cent, aligning with expectations. This marks the third consecutive instance of the central bank refraining from altering the key interest rates. While keeping the FY24 GDP projection at 6.5 per cent, the RBI raised its FY24 inflation forecast to 5.4 per cent from the previous estimate of 5.1 per cent.