Bank loans

Canara Bank loans will become more expensive as benchmark lending rate rises to 0.15%

In a move that will make lending more expensive, Canara Bank on Tuesday increased the benchmark marginal cost of funds-based landing rate (MCLR) to as much as 0.15%. The new lending rates would come into effect on Wednesday, September 7, Canara Bank said in a regulatory filing on Tuesday.

The existing loan rate, which is 7.65%, has been increased to 7.75%. The one-year rate is used to fix most consumer loans such as auto, personal, and home loans.

The one-day and one-month MCLRs are up 0.10% each, while the three-month maturity bucket rose 0.15% or 15 basis points to 7.25%.

Canara Bank raised its lending rate by 0.15% following several of its peers after the Reserve Bank of India (RBI) raised its key rate last month.

The RBI had raised the repo rate, at which the central bank lends to banks, by 50 basis points to 5.4%.

Meanwhile, Deutsche Bank said the RBI could ease its pace of rate hikes from this month and shift to similar moves after weaker-than-expected growth in April-June.

India recorded a growth of 13.5% in the April-June period this fiscal year, which was lower than the RBI projection of 16.2%.

Kaushik Das, Deutsche Bank’s chief economist, said GDP growth was disappointing compared to the RBI’s forecast.

“Given that April-June GDP growth has disappointed significantly relative to RBI’s forecast, we will not be surprised if RBI decides to slow its pace of rate hikes to 25 basis points from September,” did he declare.

The RBI had raised the repo rate by 50 basis points in August to 5.40%, following a rate hike of 50 basis points in June and 40 basis points in May. The next policy decision is expected on September 30.

(With contributions from the agency)

Catch all the trade news, market news, breaking news and latest updates on Live Mint. Download the Mint News app to get daily market updates.

More less

To subscribe to Mint Bulletins

* Enter a valid email

* Thank you for subscribing to our newsletter.

Post your comment