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ICICI Bank, Bank of India hike MCLR ahead of RBI policy

The RBI’s monetary policy committee (MPC) is scheduled to meet from August 3-5.

ICICI Bank Bank of India MCLR
Private sector lender ICICI Bank has raised its one-year MCLR by 15 bps, effective August 1. (Representational image)

By Shashank Didmishe

ICICI Bank and Bank of India on Monday raised their marginal cost of funds based lending rates (MCLR) by 15 basis points (bps) and 10 bps respectively ahead of the monetary policy meeting of the Reserve Bank of India (RBI), where the central bank is expected to hike the policy repo rate in the range of 30-35 bps. The RBI’s monetary policy committee (MPC) is scheduled to meet from August 3-5.

Private sector lender ICICI Bank has raised its one-year MCLR by 15 bps, effective August 1. With this hike, one-year MCLR offered by the bank now stands at 7.90%. The bank has also raised MCLR for loans of other maturities by 15 bps. The bank has set MCLR in the range of 7.65-7.85% for loans with overnight, one-month, three-month and six-month tenures.

PSU lender Bank of India raised its one-year MCLR by 10 bps to 7.60%, making this the third consecutive hike in MCLR announced by the bank. The lender had raised one-year MCLR by 10 bps in June and 15 bps in July. The bank has set MCLR for loans with shorter tenures in the range of 6.80-7.45% while it will levy MCLR of 7.80% for loans maturing in three years.

Bandhan Bank earlier raised its MCLR by 18–88 bps across tenures. The bank’s one-year MCLR now stands at 9.45% while loans of other maturities will attract lending rates in the range of 8.49-10.06%, effective July 30.

While the increase in repo rate has an immediate and more direct impact on the externally benchmarked lending rates (EBLR), the banks are also increasing cost-based lending rates after the RBI hiked interest rates in May and June. Banks increase their MCLR rates on a monthly basis. Despite the hikes in lending rates, the non-food credit growth of banks is continuing on high-growth trajectory, although deposit growth is lagging in comparison. Banks’ outstanding non-food credit improved 13.46% year-on-year (y-o-y) to Rs 122.45 trillion during the fortnight ended July 15, RBI data shows.

Home loan provider Indiabulls Housing Finance Ltd has raised its reference rates on home and MSME Loans by 25 bps. The new rates will be applicable for new customers from August 1 and for existing borrowers from August 5, the lender said in a press release.

Housing Development Finance Corporation (HDFC) on Saturday raised its retail prime lending rate (RPLR) on housing loans by 25 basis points (bps). The company had last raised its lending rates by 50 bps in June, following the hike in policy repo rate by the Reserve Bank of India by 50 bps in the same month.

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