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Indian Overseas Bank hikes MCLR by 15-35 bps, RLLR revised too; EMIs may rise


Public sector banker, Indian Overseas Bank (IOB) has hiked the marginal cost of funds (MCLR) by 15 basis points to 35 basis points across tenures. Also, the bank has revised its repo-linked lending rate. The hike in benchmark lending rates come after RBI raised the repo rate by 35 basis points in December 2022 bi-monthly monetary policy. IOB’s new lending rates will come into effect from December 10. Thereby, term loan EMIs are likely to go up ahead.

MCLR rates:

As per the regulatory filing, the 1-year MCLR is hiked by 20 basis points to 8.25% from the current 8.05%. While the 2-year MCLR will rise by 25 basis points to 8.35% from the present 8.10%. The 3-year MCLR rate will increase by 30 basis points to 8.40% from the current 8.10% with effect from December 10.

For short-term tenures, the MCLR will increase by 20 basis points to 8.15% on six-month tenure from the present print of 7.95%, while the rate will be 8% on three-months tenure from the current 7.85%, rising by 15 basis points. As for the 1-month tenure, the MCLR will rise by 20 basis points to 7.70% from the present 7.50%.

Meanwhile, IOB has hiked overnight MCLR rate highest by 35 basis points to 7.65% from the present 7.30%.


IOB on Wednesday said, the bank has revised the RLI-R lo 9.107. (i.e. 6.25% + 2.85% = 9.10%) with effect from December 10.

After the 35 bps repo rate hike, PSU bank stocks witnessed a significant upside including IOB shares. On BSE, IOB stock closed at 24.05 apiece up by 4.57%. The stock had reached near its 52-week high of 24.85 apiece. Currently, IOB’s market cap is over 45,460 crore.

In December policy, RBI softened its rate hike size to 35 basis points — taking the repo rate to 6.25%. So far in FY23, the repo rate has been increased by 225 basis points. Consequently, the standing deposit facility (SDF) rate stands adjusted to 6%, and the marginal standing facility (MSF) rate and the Bank Rate to 6.50%.

MPC remained focused on the withdrawal of accommodation to ensure that inflation remains within the target going forward while supporting growth.

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