Canara Bank Hikes MCLR by 5 BPS: New Rates Effective Aug 12

Canara Bank has increased its Marginal Cost of Funds-based Lending Rate (MCLR) across various loan tenures, with the revised rates taking effect from August 12. This adjustment means the bank’s MCLR rates will now span from 7.95% to 9.10%, a slight uptick from the previous range of 7.95% to 9.05%.

The bank specifically raised the one-month, three-month, six-month, one-year, two-year, and three-year lending rates by 5 basis points each. These changes directly influence the minimum interest rates for a range of loans.

Canara Bank’s Revised Lending Rates

The one-month MCLR now stands at 8.05%, an increase from its previous rate of 8.00%. Similarly, the three-month rate moved to 8.30%, up from 8.25%.

The six-month MCLR has been adjusted to 8.65%, rising from 8.60%. For longer-term borrowing, the one-year rate is now 8.80%, an increment from 8.75%.

Further adjustments include the two-year MCLR, which is now 9.05%, up from 9.00%. The three-year MCLR has also seen a hike, reaching 9.10% from its prior 9.05%.

It is important to note that the overnight MCLR remains unchanged at 7.95%. This particular tenure continues to offer the lowest rate within the bank’s MCLR framework.

Decoding the MCLR Mechanism

MCLR, or Marginal Cost of Funds-based Lending Rate, represents the minimum interest rate at which banks can lend. The Reserve Bank of India (RBI) introduced this framework in 2016 to enhance transparency in the setting of lending rates by commercial banks.

This mechanism links a bank’s lending rates to its marginal cost of funds. Consequently, any changes in a bank’s cost of borrowing or other operational costs directly impact the MCLR, and in turn, the interest rates for a variety of loans, including home loans and personal loans.