Bank Of Baroda Raises Lending Rates By 5 Basis Points Following RBI’s Steady Stance

New Delhi, 11th August 2023: The State-owned Bank of Baroda has announced a 5 basis points (bps) increase in its benchmark lending rates across various tenures, effective from August 12th. As a result of this adjustment, monthly instalments (EMIs) for home loans, personal loans, and other types of loans will experience an increase. This decision follows the Reserve Bank of India’s (RBI) recent announcement on August 11th, where they chose to maintain the key interest rates unchanged for the third consecutive time.

Bank of Baroda’s marginal cost of funds-based lending rate (MCLR) will see a hike to 7.95 per cent for overnight tenure, taking effect from August 12th. Additionally, the MCLR for one-month, three-month, and six-month periods will be raised to 8.20 per cent, 8.30 per cent, and 8.40 per cent respectively. The benchmark one-year MCLR will now stand at 8.65 per cent.

MCLR represents the minimum interest rate that financial institutions charge for various consumer loans such as auto loans, personal loans, and home loans. The determination of lending rates takes into account multiple factors, including deposit rates, repo rates, operational costs, and the expenses associated with maintaining the cash reserve ratio.

It’s important to note that only borrowers from the Bank of Baroda whose loan interest rates are connected to the MCLR will be affected by any changes in the repo rate.

In its recent monetary policy review on August 10th, the RBI’s Monetary Policy Committee (MPC) made the unanimous decision to maintain the key repo rate at 6.5 per cent, aligning with expectations. This marks the third consecutive time that the central bank has chosen to keep the key interest rates steady. The RBI has also revised its inflation forecast for FY24 upwards to 5.4 per cent from the earlier estimate of 5.1 per cent. However, the GDP projection for FY24 remains unchanged at 6.5 per cent.