Mumbai: Leading public sector bank in the country, Canara bank increased its lending rate across various tenors. The lender hiked its marginal cost of funds-based lending rate (MCLR) by 5 basis points. The new rate will be in force from November 12.
The benchmark one-year MCLR is hiked to 8.75% from the existing 8.70%. The overnight, one-month, three-month, and six-month MCLRs have also been raised by 5 basis points each.
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After this rate hike, the equated monthly instalments (EMIs) of all retail loans including car, personal and home will go up. MCLR is the minimum rate of interest banks are allowed to give out loans to its customers. It is a benchmark interest rate and it dictates the lower limit of the interest rate for a loan.
MCLR calculation is based on loan tenure, reflecting the time a borrower has to repay the loan. It serves as an internal reference rate for banks to determine loan interest. The components of MCLR include tenor premium, the marginal cost of funds, operating cost, and negative carry-on account of cash reserve ratio (CRR).
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