Three more banks raise lending rates

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Interest have begun to rise again. A number of public sector banks, including Bank of Baroda (BoB) and Canara Bank, raised the marginal cost of funds based lending rates by up to 10 basis points despite RBI keeping its policy rates unchanged.

The customers of these banks will have to pay higher EMIs for the loans taken. The one-year tenor MCLR is the rate against which most consumer loans are tied to.

The revised one-year MCLR would be 8.70 per cent as against the existing rate of 8.65 per cent, BoB said in a regulatory filing. The new rate would be effective from August 12, it said.

Canara Bank too raised its MCLR by 5 basis points to 8.70 per cent effective August 12.

Another public sector bank, Bank of Maharashtra has increased its MCLR by 10 basis points. With the hike, the rate of one-year MCLR rises to 8.60 per cent as compared to 8.50 per cent, BoM said in a filing. The revised rate is effective from August 10, 2023, it said.

The Monetary Policy Committee had decided to keep the policy repo rate unchanged at 6.50 per cent, with a provision to raise rates if required.

“Further, with monetary transmission still underway and headline inflation remaining higher than the 4 per cent target, the MPC decided to remain focused on withdrawal of accommodation to ensure that inflation progressively aligns with the target, while supporting growth,” he said.