Private sector lenders Kotak Mahindra Bank and Federal Bank have hiked their marginal cost of funds-based lending rate (MCLR) by 10 basis points (bps) across tenures from May 16, as per information available on the banks’ websites.
After the 10-bps hike, Kotak Mahindra Bank’s overnight, 1-month, 3-months, and 6-months MCLR stood at 8.35%, 8.60%, 8.75% and 9% respectively, while MCLR on 1-year tenure was at 9.20% while for 3-year tenure, the MCLR was hiked to 9.35%.
Federal Bank, meanwhile, increased its overnight, 1-month, 3-months, 6-months and 1-year MCLR by 10 bps to 9.15%, 9.20%, 9.25%, 9.35%, and 9.40%, respectively. The rate hikes by the private banks comes after the country’s largest private lender, HDFC Bank, slashed MCLR on short tenors by up to 85 basis in April.
The private sector lender had slashed its overnight MCLR by 85 bps to 7.80% while for the one-month tenor, the rate was reduced by 70 bps to 7.95%. The rate for the 3-month loans was pruned by 40 bps to 8.30% and for 6-month loans by 10 bps to 8.70%. Rates for longer 1-year, 2-year and 3-year tenors were left unchanged at 8.95%, 9.05% and 9.15%, respectively. HDFC Bank had last increased its MCLR in March by 5 bps across loan tenures to between 8.65%-9.15% per annum.
Unlike repo rate linked loans or other external benchmark linked loans which see interest rates rising in tandem with each rate hike by the Reserve Bank of India (RBI), interest rates on MCLR linked loans rises gradually. According to an RBI release dated April 28, the 1-Year median MCLR of Indian banks increased from 8.55% in March to 8.60% in April.