Bank Loan: During the month of August, now another private sector bank has increased the loan interest rate. This means that your loan EMI will increase.
Axis Bank Hike MCLR: Another private bank of India has increased the marginal cost fund based lending rates. This means that now the EMI of your loan will increase. Also, this increase is effective from 18 August 2023 for all tenures. The move to increase the loan interest rate has come at a time when the Reserve Bank of India has kept the repo rate unchanged.
RBI repo rate is stable at 6.5 percent. The bank which has increased the loan interest rate is Axis Bank, the third private bank in India. Now the new MCLR based rate range will be between 8.95 per cent and 9.30 per cent. The overnight MCLR rate has increased by five bps to 8.95 percent. While the MCLR rates for three years and six months tenure have been 9.05 percent and 9.10 percent.
MCLR for one year has been 9.15 per cent, for two years and three years the tenure has been 9.25 per cent and 9.30 per cent. The bank said that these rates will remain valid till the next review.
What will be the effect on the lenders
There is a possibility of a slight increase in MCLR from the bank. This will increase the interest rate of their loan and will have to pay slightly more EMI than before. Significantly, most of the borrowers have had to pay a higher interest rate on their EMIs in the last three years. On the other hand, some have switched to loans like EBLR due to low EMI. However, here also the users have to pay a higher interest rate.
These banks also increased the interest rate
Apart from Axis, HDFC Bank, ICICI Bank, Canara Bank, Bank of Baroda and few more banks have increased MCLR during the month of August. Some banks have already increased the loan interest rate before the RBI’s decision on the repo rate.
