Kotak Mahindra bank increases loan rates, here's how it may impact you

Kotak Mahindra Bank, a prominent private banking institution, has recently implemented a noteworthy change regarding its lending practices. Specifically, the bank has decided to increase its Marginal Cost of Lending Rate (MCLR) for a wide array of loans. Consequently, customers availing loans from Kotak Mahindra Bank will experience a surge in loan expenses. This hike entails an upward adjustment of 0.10 percent in interest rates for loans spanning various tenures.

To obtain a comprehensive understanding of the revised interest rates, interested parties are advised to consult the official website of Kotak Mahindra Bank. According to the aforementioned source, the interest rates applicable to loans with diverse tenures will now fluctuate within the range of 8.35 percent to 9.35 percent. It is noteworthy that these augmented interest rates came into effect on May 16, marking a notable change for borrowers. It is imperative to comprehend that MCLR rates serve as the foundational benchmark upon which banks calculate their respective loan interest rates.

It is worth highlighting that Kotak Mahindra Bank is not the sole financial institution that has undergone such alterations. Numerous other banks, both within the public and private sectors, have also witnessed modifications in their lending rates. For instance, Bank of Baroda, a public sector bank, experienced an increment of 5 basis points (bps) or 0.05 percent in its lending rates during the month of February. Similarly, Indian Overseas Bank amplified its MCLR-linked loan rate by 0.15 percent. Another notable instance is the increase in loan rates of South Indian Bank, ranging from 5 to 10 basis points, which occurred in the month of April.

It is pertinent to mention that the Reserve Bank of India (RBI) initiated a series of repo rate hikes beginning in May 2022. These cumulative adjustments ultimately amounted to a substantial 250 basis points increase by the end of the year. Presently, the repo rate set by the RBI remains steady at 6.50 percent. Consequently, banks commenced the practice of passing on the effects of these elevated interest rates to their customers.

Looking ahead, the forthcoming month of June will witness a pivotal event in the form of the Monetary Policy Committee meeting of the Reserve Bank of India. This crucial meeting is scheduled to take place from June 6 to June 8, culminating in the announcement of the RBI's credit policy on June 8. Notably, due to the recent decline in inflation rates, it is anticipated that the RBI may opt to lower the rates in this instance.

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