Canara Bank to hike lending rates by 15 bps across tenures: EMIs to go up

Canara Bank Marginal Cost of Funds Based Lending Rate (MCLR)

On overnight to 1-month MCLR, Canara Bank has hiked rates by 15 bps from 6.90% to 7.05%. On a three-month MCLR, the rate has been hiked by 15 bps from 7.25% to 7.40% and on a six-month MCLR, the rate has been hiked by 15 bps from 7.65% to 7.80%. On one year MCLR, the bank has hiked its rate by 1 bps from 7.75% to 7.90%.

The minimal lending rate or the internal benchmark below which a bank is prohibited from lending is known as the Marginal Cost of Funds based Lending Rate (MCLR). Since the repo rate and the marginal cost of funds-based lending rate are linked, the RBI’s 50-bps increase in the repo rate to 5.90% would have an effect on Canara Bank’s floating interest rate on your home loan.

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Canara Bank Repo Linked Lending Rate (RLLR)

Canara Bank increased its Repo Linked Lending Rate (RLLR) rate by 50 basis points, from 8.30% to 8.80%. Repo linked lending rate, also known as RLLR, is the lending rate that is linked to the repo rate set by the RBI. However, a number of variables, including the loan amount and loan-to-value ratio, affect the existing RLLR interest rate. Since RLLR is linked to an external benchmark, the interest rates on loans fluctuate.

Your EMIs will increase starting on the next reset date since Canara Bank has increased its Revision in Marginal Cost of Funds Based Lending Rate (MCLR) and Repo Linked Lending Rate (RLLR). Banks like ICICI Bank, Bank of India and Punjab National Bank (PNB), SBI, HDFC Bank, Kotak Mahindra Bank, Union Bank of India, and Indian Overseas Bank have already started raising their lending rates in response to the Reserve Bank of India’s (RBI) 50 basis point increase in the repo rate to 5.9%. The repo rate has been raised by 140 basis points since May in an attempt to control inflation. Consumer price inflation remains above the central bank’s tolerance level, according to RBI governor Shaktikanta Das, who made the announcement of the rate hikes in its Monetary Policy Committee (MPC) held in September 2022. This means that more rate hikes in the near future may be likely to occur, as many experts also believe, and as a result, loans will become costlier.