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HDFC Bank, Canara, BoM, Karur Vysya raise lending rates

Several banks have hiked the repo linked lending rates following RBI’s out of turn hike in repo rate by 0.40 per cent to 4.40 per cent last week.

The country's largest private sector lender HDFC Bank has raised the marginal cost of funds based lending rates (MCLR) by 0.25 per cent across tenors to up to 7.70 per cent with effect from May 7, 2022.
The country's largest private sector lender HDFC Bank has raised the marginal cost of funds based lending rates (MCLR) by 0.25 per cent across tenors to up to 7.70 per cent with effect from May 7, 2022.

HDFC Bank, Canara Bank, Bank of Maharashtra and Karur Vysya Bank on Monday said they have revised their lending rates based on marginal cost of funds and repo rate.

The country’s largest private sector lender HDFC Bank has raised the marginal cost of funds based lending rates (MCLR) by 0.25 per cent across tenors to up to 7.70 per cent with effect from May 7, 2022.

The benchmark one-year MCLR — to which most of the consumer loans are tied to — will cost customers 7.50 per cent, HDFC Bank said on its website.

The two-year and three-year MCLRs will be priced at 7.60 per cent and 7.70 per cent, respectively, for HDFC Bank customers. While the overnight to one-three-six month MCLRs will range from 7.15-7.35 per cent.

Bengaluru-based state-owned Canara Bank said it has raised the repo linked lending rate (RLLR) with effect from May 7, 2022, to 7.30 per cent.

The lender also revised the MCLR based lending rates, with the one-year rate at 7.35 per cent. The overnight to six months MCLRs will range from 6.65-to 7.30 per cent.

“These MCLRs shall be applicable only to new loans/advances sanctioned/the first disbursement made on or after May 7, 2022, and those credit facilities renewed/ reviewed/reset undertaken and where switchover to MCLR linked interest rate is permitted at the option of the borrower, on or after May 7, 2022,” Canara Bank said.

These MCLRs will be effective till the next review, it added.

Pune-based state-owned Bank of Maharashtra also said it has raised the MCLR across tenors by 0.15 per cent.

This is to inform that the bank has reviewed the marginal cost of funds based lending rate, which has come to effect from May 7, 2022, Bank of Maharashtra (BoM) said in a regulatory filing.

The one-year MCLR has been raised to 7.40 per cent from 7.25 per cent earlier, said the Pune-based lender.

The other tenor loans ranging from overnight to one-three and six months have also seen a hike in MCLR by the same margin from 6.85-7.30 per cent.

Further, the bank said it has raised the repo linked lending rate (RLLR) from 6.80 per cent to 7.20 per cent per annum with effect from May 7, 2022.

Private sector lender Karur Vysya Bank in a separate filing said that it has revised the external benchmark rate — Repo Linked (EBR-R) — of the bank with effect from May 9, 2022, to 7.45 per cent from 7.15 per cent.

Several banks have hiked the repo linked lending rates following RBI’s out of turn hike in repo rate by 0.40 per cent to 4.40 per cent last week.

The hike in the external benchmark or repo linked lending rate makes most of the consumer loans pricey, such as auto, home and personal.

In September 2019, the Reserve Bank had advised all banks to mandatorily link the interest rate to an external benchmark (which is the repo rate) for all new floating rate personal or retail loans as well as for floating-rate loans to MSMEs, with effect from October 1, 2019.

The MCLR system came into effect on April 1, 2016.

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