This government bank made loans expensive and increased MCLR by 0.05%...new rates applicable from today.

On the first day of August, Punjab National Bank increased MCLR by 0.05 percent i.e. 5 basis points. Due to this, most consumer loans became expensive.

Public sector Punjab National Bank (PNB) has given a shock to the customers on the first date of August. The bank has increased the Marginal Cost of Funds Based Lending Rate (MCLR) by 0.05 percent i.e. 5 basis points for all periods. Due to this, most consumer loans became expensive.

Increase of 5 basis points

PNB informed the stock market that the standard MCLR for a period of one year will now be 8.90 percent, which was earlier 8.85 percent. It is used in the evaluation of most consumer loans like motor vehicle and personal. The three-year MCLR has increased by five basis points to 9.20 percent.

BOI also increased rates

Apart from this, the interest rate for one month, three months and six months will be in the range of 8.35-8.55 percent. For one day period, MCLR will be 8.30 percent instead of 8.25 percent. The new rates have come into effect from today. Let us tell you that earlier Bank of India also announced on Wednesday to increase MCLR by 0.05 percent to 8.95 percent for a period of one year. However, the rates for the remaining period remain the same.

What is MCLR

MCLR is a method set by the Reserve Bank of India which is used by commercial banks to decide the loan interest rate. It has been implemented in India since demonetization. This has made it easier for customers to take loans. Actually, when you take a loan from a bank, the minimum rate of interest charged by the bank is called the base rate. Banks cannot give loans to anyone at a rate lower than the base rate. Now banks are using MCLR in place of this base rate.

Loans like home loans have become cheaper since the implementation of MCLR. MCLR is calculated on the basis of Marginal Cost of Funds, Period Premium, Operating Expenses and the cost of maintaining Cash Reserves Ratio. Later, the loan is given on the basis of this calculation. It is cheaper than the base rate.