BoB, Canara, BoM hike lending rate

In a move that signals a shift in the lending landscape, three major Indian public sector banks, namely Bank of Baroda (BoB), Canara Bank, and Bank of Maharashtra (BoM), have collectively announced an increase in the marginal cost of funds based lending rates (MCLR) by up to 10 basis points (bps),even though RBI retained policy rate on Thursday.This decision comes amid the evolving economic conditions and aims to balance the banks' profitability while addressing the broader financial climate.

The move will make EMIs linked to MCLR expensive. The revised one-year MCLR would be 8.70 per cent as against the existing rate of 8.65 per cent, BoB said in a regulatory filing.The new rate would be effective from August 12, it said. Canara Bank too raised its MCLR by 5 basis points to 8.70 per cent effective August 12.Another public sector lender, Bank of Maharashtra (BoM) has increased its MCLR by 10 basis points. With the hike, the rate of one-year MCLR rises to 8.60 per cent as compared to 8.50 per cent, BoM said in a filing.The revised rate is effective from August 10, 2023, it said.

Economic analysts speculate that this move could potentially be a precursor to a broader trend of lending rate adjustments across the banking sector. With the Reserve Bank of India (RBI) closely monitoring inflationary trends and economic indicators, these rate changes could have implications for monetary policy decisions in the near future.