BoB raises its lending rate by up to 20 basis points

Public sector lender Bank of Baroda on Wednesday raised its marginal cost of funds-based lending rate (MCLR) by 5 to 20 basis points (bps), effective August 12. The bank raised its one-year MCLR by 5 bps to 7.70%. This is the fifth consecutive increase in MCLR by the bank.

With that, the bank’s overnight MCLR stands at 6.85%, one month at 7.40%, three months at 7.45% and six months at 7.65%, according to a filing. exchange.

The increase in policy rates by the Reserve Bank of India (RBI) prompted banks to raise their lending rates. ICICI Bank, Punjab National Bank, Yes Bank and Bank of India increased their MCLR by 10 to 15 basis points even before the RBI policy decision was made public, while on August 8, HDFC Bank and IDFC First Bank increased their MCLRs by 5 basis points and 20 basis points, respectively.

Read also| Corporate debt repayment capacity is deteriorating: report

Banks raise their cost-based lending and deposit rates in response to higher policy rates, adding to their costs. Since April, the RBI has increased the policy repo rate by 140 basis points.

In addition, banks also set their external benchmark lending rates (EBLR), most of which are linked to the repo rate. Lenders generally revise the MCLR every month while the EBLR is amended after the policy decision of the RBI. RBI raised the repo rate by 50 basis points on Friday, after which Bank of Baroda, Punjab National Bank, Union Bank of India, Canara Bank and ICICI Bank raised their repo-linked lending rate (RLLR). The new rates are between 7.70 and 9.10%.

Non-banks such as Housing Development Finance Corporation (HDFC) and LIC Housing Finance have also increased their Retail Prime Rate (RPLR) on home loans. HDFC has increased its RPLR twice so far this month.