The RBI has raised the repo rate by 50 basis points to 5.9 per cent in conjunction with the rise in lending rates. In response to the change, public sector lender Canara Bank hiked its Repo Linked Lending Rate (RLLR) and Marginal Cost of Funds Based Lending Rate (MCLR). The revised rates will be in force from today, 7 October 2022. The bank increased the MCLR and RLLR for all tenors.
The Marginal Cost of Funds based Lending Rate (MCLR) is the minimum lending rate or the internal benchmark below which a bank is not permitted to lend. Canara Bank raised its overnight to one-month MCLR rate by 15 basis points, from 6.90 per cent to 7.05 per cent. The rate on three-month MCLR has increased by 15 basis points (bps), moving from 7.25 per cent to 7.40 per cent; on a six-month MCLR, the rate has increased by 15 bps, moving from 7.65 per cent to 7.80 per cent. The bank increased its one-year MCLR rate from 7.75 per cent to 7.90 per cent.
The repo rate and the marginal cost of funds-based lending rate are linked, therefore the RBI’s 50 basis point hike in the repo rate to 5.90 per cent will have an effect on the variable interest rate on your house loan.
The Repo Linked Lending Rate (RLLR) is the lending rate that is linked to the repo rate established by the RBI. Canara Bank raised its Repo Linked Lending Rate (RLLR) rate by 50 basis points to 8.80 per cent. However, a number of variables, such as the loan size and loan-to-value ratio, have an impact on the current RLLR interest rate. Due to RLLR’s connection to an external benchmark, interest rates on loans fluctuate.
Since Canara Bank increased their Revision in Marginal Cost of Funds Based Lending Rate (MCLR) and Repo Linked Lending Rate (RLLR), your EMIs would increase on the following reset date.
In reaction to the Reserve Bank of India’s (RBI) 50 basis point hike in the repo rate to 5.9 per cent, 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 begun increasing their lending rates.
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