Bank of India has hiked its benchmark lending rate of overnight, 6-month and 1-year tenures by 5-10 basis points. The revised marginal cost of fund-based lending rate (MCLR) will be effective Thursday (September 1). MCLR is the lowest or minimum interest rate below which financial institutions are not permitted to provide loans. As a result of the hike in the MCLR, existing and new borrowers of Bank of India will have higher EMIs.
Bank of India’s overnight MCLR has now increased by 5 basis points (bps) to 6.85 per cent, six-month MCLR has risen by 10 bps to 7.45 per cent, and the benchmark 1-year MCLR has been revised upward by 10 bps to 7.60 per cent, according to the bank’s website.
The rest of the MCLR tenures remain untouched. One-month MCLR continues to be the same at 7.3 per cent, three-month MCLR remains at 7.35 per cent and three-year MCLR at 7.80 per cent.
In the past few months, banks have been increasing their interest rates on deposits as well as loans. The hikes are following the monetary policy tightening by the Reserve Bank of India (RBI) to control inflation.
The RBI’s Monetary Policy Committee hiked the key repo rate by 50 basis points to 5.4 per cent in early August. It was the third straight hike after a 50 per cent raise in June and a 40 per cent hike in May.
The country’s inflation in April had stood at 7.79 per cent, which eased to 7.04 per cent in May and fell further to 7.01 per cent in June. The consumer inflation further declined to 6.71 per cent in July. However, it’s still above the RBI’s target of 2-6 per cent.
Apart from banks, non-banks are also hiking the interest rates. Recently, LIC Housing Finance and Bajaj Housing Finance have recently announced a hike in lending rates for home loans by 0.5 per cent.
Bajaj Housing Finance hiked its rate by 0.50 percentage points, and the lowest priced product for the salaried and professional applicants will be 7.70 per cent now. Despite the latest hike, the company claimed to be offering loans at competitive rates compared to most of its peers.
Bajaj Housing Finance lending rates now stand at 7.70 per cent for salaried and professional applicants. Self-employed applicants can avail home loans starting at 7.95 per cent based on floating interest rates.
LIC Housing Finance has increased its prime lending rate (LHPLR) by 0.50 percentage points and the new interest rates on home loans will now start from 8 per cent as against 7.50 per cent previously.
The company’s chief executive and managing director Y Viswanatha Gowd said the RBI’s decision to hike the repo rate by 0.50 per cent has caused “minimum fluctuation” in monthly installments or tenure of home loans and exuded confidence that demand for housing will remain robust.
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