Public sector lender Bank of India on Friday became the latest to raise marginal cost-based lending rates (MCLR) across most maturities.
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Bank of India raised the key 1-year MCLR to 8.50 percent from 8.40 percent, effective June 10.
MCLR is the latest benchmark based on cost of funds and is the floor rate at which banks lend to borrowers.
The lender will charge 7.90 percent for overnight loans from 7.80 percent earlier. The 1-month and 3-month MCLR have been increased by 10 basis points each to 8.20 percent and 8.30 percent, respectively. One basis point is one-hundredth of a percentage point, according to a statement.
The move comes after the Reserve Bank of India on Wednesday raised key interest rates by 25 basis points to 6.25 percent.
Many private sector and state-owned banks have raised MCLRs in the last few days, as risks such as surging bond yields and more provisioning requirements erode their profit.
HDFC Bank, the largest private bank in terms of market value, has raised lending rates by 10 basis points to 8.40 percent while State Bank of India, country’s largest bank, will now charge 8.25 percent for one year as against 8.15 percent earlier.
First Published: IST