Loan Rate Hike: In recent developments, Canara Bank has increased its loan interest rates. This change primarily revolves around the adjustment of the Marginal Cost of Funds Based Lending Rates (MCLR). This article delves into the implications of this rate hike and how it could affect loan borrowers.
Understanding the Change
Canara Bank has announced an increment in the MCLR by 0.05%. This newly revised rate is already in effect. For those who might be unaware, MCLR is a crucial determinant in how banks set their interest rates on loans. Let’s explore the updated MCLR rates across different tenures.
Details of the Revised Rates
For most tenures, there has been an increment in the MCLR. The overnight MCLR is set at 7.95%, while the one-month MCLR stands at 8.05%. Furthermore, the three-month MCLR has been adjusted to 8.15%, the six-month rate is at 8.50%, and the one-year MCLR is now 8.70%.
Significance of MCLR
For those unfamiliar with banking terminologies, it’s essential to understand the role of MCLR. MCLR represents the minimum interest rate at which a bank can lend to its customers. Any lending rate offered by the bank cannot be below this benchmark. This mechanism ensures a certain level of uniformity and fairness in lending practices.
Implications for Borrowers
With the rise in MCLR, those looking to borrow from Canara Bank might experience a slight increase in the interest rates of their loans. Current borrowers, especially those with floating interest rate loans linked to MCLR, might also see their EMIs (Equated Monthly Instalments) go up slightly.
In conclusion, while the increase in MCLR by Canara Bank is marginal, it’s essential for both existing and potential borrowers to be informed about these changes and plan their finances accordingly.