Allahabad Bank hikes benchmark lending rate by 0.05%

State-owned Allahabad Bank Monday raised benchmark lending rate by 5 basis points or 0.05 per cent, a move that will make all its loans including home loan costlier.

The Asset Liability Management Committee (ALCO) of the bank has reviewed the existing Marginal Cost of Funds Based Lending Rates (MCLRs) and decided for an upward revision of MCLR by 5 basis points, Allahabad Bank said in a filing to stock exchanges.

The new rates would be effective from November 1, it said.

MCLR for a one-year tenor will rise to 8.55 per cent from 8.5 per cent. Most of the retail loans are benchmarked against one-year MCLR. 

MCLR for a two-year tenor has been increased to 8.75 per cent from 8.70 per cent, while 8.85 per cent for three year period.

The MCLR mechanism was introduced into banking system in April 2016 as an alternative to the base rate, below which banks cannot lend, for new borrowers.

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MCLR is calculated on the marginal cost of borrowing and return on net worth for banks.