New Delhi: Canara Bank has raised its benchmark lending rate by 0.15 % on Tuesday. The move will eventually make loans costlier for borrowers. The revised marginal cost of funds-based lending rate (MCLR) across various tenors will be effective from Wednesday, the lender said in a regulatory filing.
Now the benchmark one-year MCLR will be 7.75 % from the earlier 7.65 %. The one-year benchmark is used to fix most customers loans such as auto, personal, and home loans. The bank has increased overnight and one-month tenor MCLRs by 0.10 % and it has increased three month maturity for 0.15 %.
It is to be noted that the others public and private lenders have also changed their MCLR or RLLR in the recent weeks followed by repo rate hike by the Reserve Bank of India (RBI) by 0.50 basis points last month.
What is Marginal cost of funds-based lending rate (MCLR)?
MCLR is the minimum lending rate below which a bank or financial institution can’t afford to lend others because it won’t be sustainable in the long run. Under MCLR, it’s mandatory for banks to declare their different tenors interest rate every month. It was introduced in the financial system by the RBI in 2016.
(With PTI Inputs)