 "banks")
Reflecting a rise in the cost of deposits, Delhi-based public sector lender Punjab National Bank has hiked the Marginal Cost of Funds Based Lending Rate (MCLR) by five basis points across different tenors from 1 January 2024. One-year MCLR is now 8.7 per cent.
Meanwhile, Bank of Baroda, a Mumbai-based public sector lender, has hiked the car loan rate from 8.7 per cent to 8.8 per cent from the start of the month. Rate revision comes after the end of its festive period offer.
A PNB executive said there is intense competition for mobilising resources for which banks have and are raising deposit rates, increasing the cost of funds. MCLR revision is the outcome of that which will mostly impact business customers. As for the change in interest rates on retail loans, they have to take into account competition, which remains strong.
Another Mumbai-based lender, Union Bank of India, has withdrawn festival discounts (25-30 basis points) offered on vehicle loans. While the bank did see good traction in terms of building a loan book during the festive season, there is also an element of protecting Net Interest Margin (NIM). This weighed on the decision to discontinue sops offered during the festival period, a senior bank executive said.
The asset liability management panel of Bengaluru-based public sector lender Canara Bank is expected to meet in the next two days to review rates for January. The rise in the cost of money will reflect in the decision on MCLR. The room for hiking rates is limited across loan products, given the high competition amongst lenders. This business environment is likely to remain in vogue for the remaining part of the current financial year (FY25), a Canara Bank executive said.
