Loan Rate Hike: Another private bank joins loan rate hike trend after State Bank and Canara Bank.
Loan Rate Hike: Kotak Mahindra Bank, one of the leading private sector banks in India, has increased its marginal cost of lending rates (MCLR) by 5 basis points. This move has come as a shock to the bank's customers, who will now have to pay more EMIs on their loans. The new rates have come into effect from March 16, 2023.
The MCLR of Kotak Mahindra Bank for different tenures has increased as follows: the overnight loan MCLR has risen to 8.25 percent, 1-month MCLR to 8.50 percent, 3-month MCLR to 8.65 percent, and the MCLR for loans of 1 year, 2 years, and 3 years has increased to 9.05 percent, 9.10 percent, and 9.25 percent, respectively.
This increase in lending rates by Kotak Mahindra Bank follows similar moves by other banks. For instance, State Bank of India (SBI), the largest public sector bank in India, increased its base rate and benchmark prime lending rate (BPLR) from March 1, 2023. SBI increased its BPLR by 0.70 percent or 70 basis points, from 14.15 percent to 14.85 percent. The bank has decided to increase its Base Rate and BPLR on a quarterly basis.
Similarly, Canara Bank, another public sector bank, increased its MCLR from March 12, 2023. The bank raised its overnight MLCR by 35 basis points to reach 7.90 percent. The 1-month MLCR increased by 45 basis points to 8.00 percent, while the 6-month MLCR increased by 10 basis points to 8.40 percent. Additionally, the 3-month MLCR increased by 25 basis points to 8.15 percent, and the 1-year MLCR increased by 10 basis points to 8.60 percent.
The recent increase in lending rates by Kotak Mahindra Bank, SBI, and Canara Bank has left their customers with higher EMIs to pay on their loans. It remains to be seen whether other banks will follow suit in raising their lending rates, and how this will impact India's economy in the coming months.
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