The public sector lender Punjab National Bank (PNB) announced that the marginal cost of funds-based lending rate (MCLR) will increase by 0.05% or 5 bps across tenors with effect starting on September 1. This will result in higher monthly payments for a variety of consumer loan products. The benchmark three-year MCLR is now at 8%, an increase of 0.05%, while the benchmark one-year tenor MCLR will rise from 7.65 per cent to 7.70 per cent, PNB announced in a regulatory filing on Wednesday. These rates are connected to the majority of consumer loans, including automobile, auto, and personal loans.
The rates will vary from 7.10 to 7.40 per cent for the one-month, three-month, and six-month durations. The MCLR for the overnight tenor will be 7.05 per cent as compared to 7% before. The PNB increased the repo-linked lending rate earlier this month by 0.5%, going into effect on August 6, in response to the RBI's previous increase in the repo rate.
Early in August, the Monetary Policy Committee of the RBI increased the benchmark repo rate by 50 basis points, to 5.4 per cent. The interest rates on loan and deposit products increased as a result of the third consecutive increase in the repo rate. The MCLR is the lowest interest rate a bank or lender can provide (marginal cost of funds-based lending rate). Current customers of the bank see higher EMIs for consumer credit products as the MCLR rises.
On Tuesday, the Bank of India (BOI) raised the benchmark lending rate for the overnight, six-month, and one-year periods by an additional 5-10 basis points. According to a statement from the bank, the new marginal cost of fund-based lending rate (MCLR) will take effect on September 1. The benchmark 1-year MCLR has increased by 10 basis points (bps) to 7.60%, the benchmark 6-month MCLR has increased by 10 bps to 7.45%, and the benchmark overnight MCLR has increased by 5 bps to 6.85%, according to a regulatory filing by the Bank of India. The equivalent monthly instalments (EMI) for several loan types will therefore increase for borrowers of the two banks mentioned above once the loan reset date arrives. Due to the rise in the MCLR, existing and new borrowers with Bank of India and PNB will begin making higher EMI payments as of the reset date of the following month.
(With inputs from PTI)
