New rates applicable from 12th August
Bank of Baroda (Bank of Baroda) in the information sent to the stock market on Wednesday said that they have approved the increase in the MCLR rate. They will be implemented from August 12. The one-year benchmark MCLR has been revised from 7.60 per cent to 7.70 per cent. Most consumer loan interest rates are fixed on this basis.
MCLR for one-month term loans has been increased by 0.20 per cent to 7.40 per cent. At the same time, it has been decided to raise MCLR by 0.10 per cent to 7.45 and 7.55 per cent for three-month and six-month loans respectively.
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EMI will increase
EMI on term loans is expected to increase as MCLR increases. Most consumer loans have a loan rate based on retail value. In such a scenario, personal loans, auto and home loans can become expensive due to increase in MCLR.
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What is MCLR?
MCLR is a methodology developed by the Reserve Bank of India (RBI), based on which banks decide the interest rate for loans. Reserve Bank of India started MCLR in the country from 1st April 2016. Before that, all the banks used to fix the interest rate for the customers on the basis of base rate. Now any increase or reduction in MCLR by banks affects new and existing borrowers as well.