Bank of Baroda and Canara Bank have increased the MCLR (Marginal Cost of Funds Based Lending Rate) for some period. The new rates are effective from August 12, 2026. MCLR has been increased by 5 to 10 basis points depending on the tenure. This may impact those consumer loans whose interest rates are linked to MCLR.
Canara Bank has increased MCLR by up to 5 basis points for various tenures. One basis point is equal to 0.01 percent. The new MCLR of the bank ranges from 7.95 percent to 9.10 percent depending on the tenure. The bank kept the overnight MCLR unchanged at 7.95 percent. One month MCLR increased from 8 percent to 8.05 percent.
Three-month MCLR increased from 8.25 percent to 8.30 percent. Six-month MCLR increased from 8.60 percent to 8.65 percent. One year MCLR increased from 8.75 percent to 8.80 percent. Two-year MCLR increased to 9.05 percent and three-year MCLR increased to 9.10 percent.
Bank of Baroda has also made changes in MCLR for some periods. Three-month MCLR increased by 10 basis points from 8.20 percent to 8.30 percent. However, the overnight MCLR was kept unchanged at 7.85 per cent and the one-month MCLR at 7.95 per cent.
Six-month MCLR remained unchanged at 8.50 percent and one-year MCLR at 8.75 percent. As a result, the revised MCLR of Bank of Baroda ranges from 7.85 per cent to 8.75 per cent for different tenures.
The change comes at a time when the Reserve Bank of India (RBI) has decided to keep the repo rate unchanged at 5.25 percent in its latest monetary policy review.
The full form of MCLR is Marginal Cost of Funds Based Lending Rate. It is an internal benchmark rate, based on which banks set interest rates for different types of loans. RBI started the MCLR system in April 2016.
Increase in MCLR may increase the interest cost of MCLR linked floating rate loans. But every customer’s EMI does not increase immediately. The actual impact depends on the type of loan, bank spreads and interest rate reset dates.
The increase in MCLR may impact those customers whose current loan interest rate is linked to this benchmark. These may include some home loans, personal loans and other retail or corporate loans.
The customer’s effective interest rate may increase if the new MCLR is applicable on the next reset date of the loan. As a result, the bank can increase the EMI or extend the loan tenure while maintaining the same EMI. However, consumers whose loans are linked to other external benchmarks such as repo-linked lending rates will not necessarily be directly affected by this change.