Axis Bank, the country’s third-largest private bank by assets, on Monday raised marginal cost of funds-based lending rates (MCLRs) by 10 basis points (bps) across tenures, following similar hikes by its peers earlier this month. The one-year MCLR at the bank now stands at 8.6%. This is the fourth rate hike by the lender in calendar year 2018. Axis Bank had last raised the one-year rate in May by 10 bps to 8.5%. Earlier this month, State Bank of India (SBI), HDFC Bank, ICICI Bank, Punjab National Bank (PNB), Bank of Baroda, Housing Development Finance Corp (HDFC), Kotak Mahindra Bank, Union Bank of India, Indian Bank and Karur Vysya Bank have raised MCLRs amid a situation of tight liquidity in the system. Some of them took the rate decision following Reserve Bank of India’s (RBI) 25-bp repo rate hike on June 6. The hardening of bond yields in the last few months have allowed banks some elbow room to raise lending rates. After almost four years, banks are once again the preferred port of call for borrowers as interest rates in the bond markets harden. Yields on AAA-rated bonds have moved up to levels of 8.4%; that’s a shade higher than SBI’s one-year MCLR of 8.25% and on par with that of HDFC Bank, ICICI Bank and PNB. Interest rates have hardened also because of intermittent liquidity deficits over the past three-four months. In comparison, there were liquidity surpluses in 2016 and 2017 as credit off-take slowed sharply as companies flocked to the bond markets.