New Delhi: Bank of India has increased its overnight, 6-month and 1-year lending rates by 5-10 basis points. The revised marginal cost of funds based lending rate (MCLR) will be implemented on Thursday (September 1). MCLR is the lowest or minimum interest rate at which financial institutions cannot lend. Existing and new Bank of India borrowers will face higher EMIs as a result of the MCLR hike.
According to the bank’s website, the overnight MCLR has now increased by 5 basis points (bps) to 6.85 per cent, the six-month MCLR has increased by 10 bps to 7.45 per cent, and the benchmark 1-year MCLR has been revised upwards to 10 per cent. 7.60 percent from BPS.
Rest of the MCLR terms are unaffected. One-month MCLR remains at 7.3%, three-month MCLR at 7.35% and three-year MCLR at 7.80%.
Banks have been raising interest rates on both deposits and loans in recent months. The hike comes in response to the tightening of monetary policy by the Reserve Bank of India (RBI) to control inflation.
In early August, the RBI’s Monetary Policy Committee raised the key repo rate by 50 basis points to 5.4 per cent. This was the third consecutive increase after a 50% increase in June and a 40% increase in May.
The country’s inflation rate was 7.79 percent in April, but it fell to 7.04 percent in May and 7.01 percent in June. Consumer inflation fell further to 6.71 per cent in July. However, it remains above the RBI’s target range of 2-6 per cent.
Apart from banks, non-banks are also raising interest rates. Recently, LIC Housing Finance and Bajaj Housing Finance announced an increase in home loan lending rates by 0.5 percent.
Bajaj Housing Finance increased its rate by 0.50 percent, and the lowest priced product for salaried and professional applicants is now 7.70%. Despite the latest increase, the company claims to offer loans at competitive rates as compared to most of its competitors.
For salaried and professional applicants, Bajaj Housing Finance lending rates now stand at 7.70%. Self-employed applicants can avail home loans with interest rates starting from 7.95 per cent based on floating rates.
LIC Housing Finance has increased its prime lending rate (LHPLR) by 0.50 per cent, and the new home loan interest rates will now start at 8%, from 7.50% earlier.
The company’s chief executive and managing director Y Vishwanath Gaur said the RBI’s decision to hike the repo rate by 0.50 per cent has resulted in “minimal fluctuations” in monthly installments or loan tenure, and expressed confidence that housing demand will remain strong. .