Bank of Maharashtra home loan EMIs set to rise as lender hikes MCLR rates up to 30 basis points

Bank of Maharashtra – a state-run public sector bank – has increased the MCLR rates up to 30 basis points, an exchange filing said on Monday.

“This is to inform that the Bank of Maharashtra has undertaken a review of MCLR and decided to revise the Marginal Cost of Funds Based Lending Rate (MCLR),” the PSU bank said while attaching a list of revised and existing MCLR rates. The new rate shall come into effect from February 13.

As per the Bank of Maharashtra’s filing, the overnight MCLR (MCLR) has been increased to 7.8 per cent from 7.50 per cent and the one-month MCLR was raised to 8 per cent from 7.7 per cent earlier.

Similarly, MCLR for three months period is hiked to 8.2 per cent from 7.9 per cent earlier and the for the six months it was revised to 8.3 per cent from 8 per cent, while the one-year MCLR was increased to 8.4 per cent from 8.2 per cent earlier, according to the filing.

Here, Marginal Cost of Lending Rates or MCLR refers to the minimum interest rate below which financial institutions can't lend, except in certain cases.

Amid the hike in MCLR rates, the monthly installments of home, car, and other loans shall increase. It could be seen as an extra burden on the current as well as new borrowers.

Bank of Maharashtra’s MCLR hike is in line with the Reserve Bank of India’s rate hike. Last week, the RBI increased the repo rate by 25 basis points to 6.50 per cent.

Earlier, Bank of Baroda had also increased MCLR rates, days after the RBI’s rate hike announcement.

Among all public sector lenders, Bank of Maharashtra (BoM) emerged as the top performer in terms of percentage growth in profit. The Pune-based lender recorded a 139 per cent jump in profit to Rs 775 crore at the end of December 2022, according to quarterly results declared by the bank.