State-owned Bank of Baroda has increased its benchmark lending rates by 5 basis points (bps) on various tenures, effective August 12. After the move, EMIs on home loans, personal loans, etc, will now go up. It comes a day after the Reserve Bank of India (RBI) on Thursday, August 11, decided to keep the key interest rates unchanged for the third time in a row.
Bank of Baroda’s marginal cost of funds-based lending rate (MCLR) has been hiked to 7.95 per cent for overnight tenure, effective August 12. Apart from this, one-month, three-month, and six-month MCLRs have been hiked to 8.20 per cent, 8.30 per cent and 8.40 per cent, respectively. Its benchmark one-year MCLR will now be at 8.65 per cent.
MCLR is the minimum interest rate that a financial institution charges for most consumer loans such as auto, personal and home. While deciding the lending rates, several factors are considered including deposit rates, repo rates, operating costs and the cost of maintaining the cash reserve ratio.
Only those banks’ borrowers whose loan interest rates are linked with MCLR will be impacted in case of any changes in the repo rate.
In its monetary policy review on Thursday, August 10, the RBI MPC unanimously decided to keep the key repo rate unchanged at 6.5 per cent, in line with expectations. This is the third time in a row that the central bank has paused the key interest rates. It has revised upwards FY24 inflation forecast to 5.4 per cent from the 5.1 per cent estimated earlier, while maintaining FY24 GDP projection at 6.5 per cent.
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