Bank of India revises its MCLR

New Delhi: State-owned Bank of India revised its Marginal Cost of Fund based Lending Rate (MCLR) with effect from June 1, said the bank in a regulatory filing on Wednesday. In a meeting, which was held on May 30, the Bank's ALCO approved the modifications in MCLR.

Bank hikes its MCLR

Further, the filing noted that the bank has increased its overnight MCLR from 7.9 percent to 7.95 percent. The one-month MCLR increased from 8.1 percent to 8.15 percent, its three-month MCLR increased from 8.2 percent to 8.25 percent. The bank's hiked its six-month MCLR from 8.4 percent to 8.45 percent and its one-year MCLR was hiked from 8.6 percent to 8.65 percent. Also, the bank's three-year MCLR increased from 8.8 percent to 8.85 percent.

About MCLR

MCLR is the benchmark lending rate used by banks in India to determine the interest rates for various loans, such as home loans, personal loans, and business loans. MCLR is set by each bank based on its marginal cost of funds, which includes factors such as the cost of borrowing, operational expenses, and the desired profit margin.

MCLR is a transparent method for determining lending rates and was introduced by the Reserve Bank of India (RBI) in April 2016 to replace the base rate system. It is based on factors such as the repo rate, the bank's own operating cost, and the tenure premium.

Any changes in the MCLR are passed on to the borrowers by adjusting the spread or margin over the MCLR. It provides greater transparency and flexibility in loan pricing, as banks need to review and publish their MCLR rates periodically. This allows borrowers to compare rates offered by different banks and make informed decisions while availing of loans.

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