BoB raises lending rate by 5 basis points

State-owned Bank of Baroda today raised benchmark lending rate by 5 basis points across tenure in line with other competitors.

The decision to raise lending rate comes a day before the bi-monthly monetary policy announcement of the Reserve Bank of India indicating pressure on interest rate to move upward.

Marginal cost of funds-based lending rate (MCLR) has been reviewed at 5 basis points above existing level with effect from June 7, BoB said in a statement.

The bank's 1-year MCLR will be 8.45 per cent, which is competitive as per the current market scenario, it said.

For all other tenors - overnight, one month, three months and six months - rates will be 7.95 per cent, 8 per cent, 8.1 per cent and 8.3 per cent, respectively.

The increase is attributed to higher cost of fund and rising interest rate scenario.

Lately, several banks including SBI, ICICI, PNB and Union Bank have raised their MCLR.

Last week, three major banks SBI, PNB and ICICI Bank increased their MCLR by up to 0.1 per cent, making loans costlier for consumers.

All loans linked to MCLR will become costlier. Most of home and auto loans are linked to MCLR.

BoB said it does not add any mark-up on its MCLR for its best rated home loan borrowers.

The bank offers home loans at one-year MCLR to its best-rated customers, it said, adding, one-year MCLR is applicable irrespective of the total home loan amount and is available for a tenure up to 30 years.