BoB’s MCLR Revision: A Small Change, A Big Opportunity!

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Bank of Baroda has declared a change in its Marginal Cost of Lending Rate (MCLR), lowering the one-year rate from 9% to 8.95%, from May 12. The change is in line with the bank's practice of keeping lending rates competitive in the face of changing market conditions.

The new MCLR rates will impact all loan segments like home loans, personal loans, and corporate borrowings linked to the benchmark rate. Floating-rate borrowers who have borrowed loans against the one-year MCLR will benefit from a marginal reduction in their interest burden, providing financial relief in a high-interest rate environment.

Bank of Baroda's latest action is consistent with overall trends in the banking industry, where banks are repricing lending rates in sync with liquidity and regulatory directives. Bank of Baroda's overnight MCLR is still at 8.15%, while shorter tenors like one-month and three-month MCLR are at 8.35% and 8.50%, respectively.

Industry leaders expect this incremental fall to be a harbinger of more rate hikes in the near future based on inflation movements and Reserve Bank of India monetary policy actions.

For the borrowers, this amendment provides a chance to review loan repayment schedules and gain refinancing options for lowering interest expenses.

Source: Economic Times