New Delhi: State-owned Bank of Baroda said in a regulatory filing that it has revised the Marginal Cost of Funds Based Lending Rate (MCLR) with effect from June 12. The bank has revised the one-year MCLR from 8.6 percent to 8.65 percent.

Further, the bank also reviewed overnight MCLR to 7.95 percent. Its one-month MCLR stood at 8.2 percent. The bank's three-month MCLR stood at 8.3 percent and its six-month MCLR stood at 8.4 percent.

About MCLR

MCLR is a benchmark rate used by banks in India to determine the interest rate for lending purposes. It was introduced by the RBI to enhance the transmission of policy rates to lending rates in the banking system. The objective was to make the lending rates more responsive to changes in key policy rates set by the central bank. By linking the lending rates to the MCLR, changes in the repo rate or other policy rates can be passed on to borrowers more effectively.

MCLR takes into account various components of a bank's cost of funds, such as the marginal cost of borrowing, return on net worth, and operating costs. This calculation ensures that the lending rates are more aligned with the actual cost of funds for the bank. It helps banks to fix the pricing of their loans based on their funding costs and overall operating expenses.

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