New Delhi, 11th August 2023: The State-owned Bank of Baroda has announced a marginal increase of 5 basis points (bps) in its benchmark lending rates across various tenures, effective from August 12th. This adjustment will have an impact on the monthly instalments (EMIs) for various loans including home loans and personal loans. The decision comes in response to the Reserve Bank of India’s (RBI) recent decision on August 11th to maintain the key interest rates unchanged for the third consecutive time.
The Bank of Baroda will witness a marginal cost of funds-based lending rate (MCLR) hike to 7.95 per cent for the overnight tenure, effective from August 12th. Furthermore, the MCLR for the one-month, three-month, and six-month periods will experience a rise to 8.20 per cent, 8.30 per cent, and 8.40 per cent respectively. Meanwhile, the benchmark one-year MCLR will be adjusted to 8.65 per cent.
The MCLR is a significant factor determining the minimum interest rate for various consumer loans such as auto loans, personal loans, and home loans. Lending rates are influenced by factors such as deposit rates, repo rates, operational costs, and the expenses associated with maintaining the cash reserve ratio.
It’s important to clarify that only borrowers linked to the Bank of Baroda whose loan interest rates are connected to the MCLR will be affected by any changes in the repo rate.
In its recent monetary policy review on August 10th, the Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) made the unanimous decision to maintain the key repo rate at 6.5 per cent, consistent with earlier decisions. This marks the third consecutive time that the central bank has chosen to keep the key interest rates steady. The RBI has also revised its inflation forecast for the fiscal year 2023-24 upwards to 5.4 per cent from the previous estimate of 5.1 per cent. However, the GDP projection for the same fiscal year remains unchanged at 6.5 per cent.
