Union Bank of India and Bank of Baroda increased their loan marginal costs of funds-based lending rates (MCLR). While the Bank of Baroda upped its MCLR by 10-15 basis points across all tenures, the Union Bank of India raised it by 30 basis points across all tenures. The MCLR increase will boost EMIs for both existing and new borrowers.
The move comes as the RBI continues to raise key interest rates to contain inflation. Since May of this year, the RBI has lifted 190 basis points. The central bank undertook an off-cycle monetary policy review in May, raising the repo rate to contain inflation. It had increased by 40 basis points throughout the evaluation.
According to the website of the Bank of Baroda, the lender's benchmark one-year MCLR has now climbed to 8.05 percent, up from 7.95 percent previously. The new tariffs go into effect on November 12.
Its overnight MCLR has been raised by 15 basis points to 7.25 percent. The one-month MCLR has risen to 7.70% from 7.60% previously. The three-month and six-month MCLRs have both increased by 10%, to 7.75% and 7.95%, respectively.
According to the Union Bank of India's website, the updated interest rates are applicable from November 11, 2022, through December 10, 2022. The overnight rate MCLR of the bank has been raised to 7.45 percent from 7.15 percent. Its one-month, three-month, and six-month interest rates are currently 7.60%, 7.80%, and 8%, respectively. The one-year, two-year, and three-year MCLRs are 8.20 percent, 8.40 percent, and 8.55 percent, respectively.
In September, retail inflation in India reached a five-month high of 7.41%. It was the ninth month in a row that Consumer Price Index (CPI)-based inflation stayed over the RBI's maximum tolerance level of 6%, despite the central bank's attempts to reduce it. Retail inflation was 7.04 percent in May, 7.01 percent in June, 6.71 percent in July, 7% in August, and 7.41 percent in September.
