As June rolls in, loan customers of Punjab National Bank (PNB), Bank of India (BOI), and ICICI Bank are in for some major changes. These prominent banks have recalibrated their Marginal Cost Lending Rate (MCLR) across all tenures, affecting the interest rates of consumer loans.
PNB and BOI Hike Rates
PNB and BOI, two of India’s largest government banks, have increased their MCLR. For PNB, the rise is by 10 basis points across all tenures, while for BOI, it’s a slightly smaller increase of 5 basis points.
Specifically, PNB’s overnight benchmark MCLR rose from 8 per cent to 8.10 per cent. Concurrently, rates for one month, three months, and six months also saw a surge to 8.20 per cent, 8.30 per cent, and 8.50 per cent respectively. One-year MCLR rose to 8.60 per cent, and the three-year MCLR increased to 8.90 per cent from 8.80 per cent.
Meanwhile, BOI’s overnight MCLR now stands at 7.95%, with one month, three months, and six months MCLR rising to 8.15 per cent, 8.25 per cent, and 8.45 per cent respectively. The one-year MCLR now sits at 8.65 per cent.
ICICI Makes Mixed Adjustments
ICICI Bank, a leading private sector bank, has made nuanced adjustments to its MCLR. It’s increased the MCLR by 5 basis points for six months and one year, while decreasing the MCLR by 15 basis points for one and three months.
Presently, the one-month MCLR in ICICI Bank has dropped to 8.35% from 8.50%, and the three-month MCLR has also been lowered to 8.40% from 8.55%. On the other hand, the MCLR for one year and six months has risen to 8.75% and 8.85% respectively.
Impact on Consumers
The MCLR is the lowest possible interest rate at which a bank can lend. This rate determines the interest on all consumer loans, including home loans and car loans. A decrease in MCLR makes loans cheaper for customers, reducing the Equated Monthly Instalment (EMI), but an increase in MCLR results in costlier loans.
- Punjab National Bank (PNB) and Bank of India (BOI) have increased their MCLR by 10 and 5 basis points respectively.
- ICICI Bank increased the MCLR by 5 basis points for six months and one year but cut the MCLR by 15 basis points for one and three months.
- Changes in MCLR directly impact the cost of consumer loans, with a higher MCLR leading to more expensive loans and vice versa.