MCLR Rate
MCLR, full form Marginal Cost of Fund based Lending Rate is the internal benchmark rate used by banks to fix the interest rate on floating rate loans. Starting from 1st April 2016, all banks in India are required to benchmark and price their loans to MCLR.
Current MCLR, Base Rate, PLR Trend of All Banks in India Jun 2018
| Bank MCLR, Past Trend | Current MCLR Rate – 20th Jun 2018 | Base Rate | Latest Update |
|---|---|---|---|
| SBI MCLR Base Rate | 7.90% - 8.45% | 8.70% | 01st Jun 18 |
| HDFC PLR | - | 16.45% | 04th Jun 18 |
| ICICI Bank MCLR Base Rate | 8.05% - 8.40% | 8.85% | 01st Jun 18 |
| Axis Bank MCLR Base Rate | 8.10% - 8.75% | 8.95% | 18th Jun 18 |
| PNB Housing Finance PLR | - | 14.35% | 01st Mar 17 |
| LIC Housing Finance PLR | - | 14.20% | 10th Oct 15 |
| Bank of Baroda MCLR Base Rate | 7.95% - 8.45% | 9.15% | 07th Jun 18 |
| Citibank MCLR Base Rate | 7.70% - 8.15% | 8.55% | 07th Jun 18 |
| Indiabulls PLR | - | 16.90% | 01st Feb 17 |
| HDFC Bank MCLR Base Rate | 8.05% - 8.70% | 8.95% | 07th Jun 18 |
| IndusInd Bank MCLR Base Rate | 8.70% - 9.45% | 10.55% | 17th May 18 |
| Kotak Bank MCLR Base Rate | 7.95% - 8.95% | 9.10% | 01st Jun 18 |
| Yes Bank MCLR Base Rate | 8.15% - 9.45% | 10.25% | 01st Jun 18 |
| RBL Bank MCLR Base Rate | 9.10% - 9.85% | 10.10% | 22nd May 18 |
| IDFC Bank MCLR Base Rate | 8.20% - 9.20% | 9.50% | 08th Jun 18 |
| DBS Bank MCLR Base Rate | 8.40% - 8.70% | 8.30% | 07th Jun 18 |
| Bajaj Finserv PLR | - | 20.16% | 01st May 14 |
| Syndicate Bank MCLR Base Rate | 8.00% - 8.55% | 9.50% | 10th Jun 18 |
| Karnataka Bank MCLR Base Rate | 8.35% - 8.85% | 10.25% | 01st Jun 18 |
| Lakshmi Vilas Bank MCLR Base Rate | 8.85% - 9.70% | 10.15% | 01st Jun 18 |
| Vijaya Bank MCLR Base Rate | 7.90% - 8.75% | 9.65% | 07th Jun 18 |
| Jammu And Kashmir Bank MCLR Base Rate | 7.90% - 9.30% | 9.50% | 10th Jun 18 |
| Karur Vysya Bank MCLR Base Rate | 8.30% - 9.30% | 10.10% | 07th Jun 18 |
| United Bank of India MCLR Base Rate | 8.00% - 8.70% | 9.50% | 14th May 18 |
| Standard Chartered Bank MCLR Base Rate | 7.70% - 9.25% | 8.55% | 08th Jun 18 |
| LT Housing Finance PLR | - | 17.35% | 01st Jan 70 |
| OBC MCLR Base Rate | 8.20% - 8.65% | 9.45% | 11th Jun 18 |
| PNB MCLR Base Rate | 7.80% - 8.70% | 9.25% | 01st Jun 18 |
| Union Bank of India MCLR Base Rate | 7.95% - 8.55% | 8.95% | 02nd Jun 18 |
| UCO Bank MCLR Base Rate | 8.00% - 8.55% | 9.60% | 10th Jun 18 |
| Allahabad Bank MCLR Base Rate | 7.85% - 8.65% | 9.15% | 01st Jun 18 |
| South Indian Bank MCLR Base Rate | 8.00% - 9.00% | 9.90% | 20th May 18 |
| Punjab and Sind Bank MCLR Base Rate | 7.90% - 8.80% | 9.70% | 16th Jun 18 |
| Indian Overseas Bank MCLR Base Rate | 7.95% - 8.70% | 9.45% | 10th Apr 18 |
| Dena Bank MCLR Base Rate | 7.80% - 8.40% | 9.60% | 01st Jun 18 |
| DCB Bank MCLR Base Rate | 8.60% - 9.97% | 10.44% | 12th Jun 18 |
| Corporation Bank MCLR Base Rate | 8.00% - 8.85% | 9.65% | 15th Jun 18 |
| Central Bank of India MCLR Base Rate | 7.85% - 8.45% | 9.60% | 01st Jun 18 |
| Canara Bank MCLR Base Rate | 8.10% - 8.50% | 9.40% | 07th Jun 18 |
| Bank of Maharashtra MCLR Base Rate | 8.30% - 8.75% | 9.50% | 07th Jun 18 |
| Bank of India MCLR Base Rate | 7.90% - 8.50% | 9.45% | 10th Jun 18 |
| Bandhan Bank MCLR Base Rate | 9.21% - 10.84% | 12.00% | 09th Apr 18 |
| Dhan Laxmi Bank MCLR Base Rate | 8.60% - 9.70% | 11.25% | 07th Jun 18 |
| DHFL PLR | - | 18.57% | 19th Jun 18 |
| Indian Bank MCLR Base Rate | 8.00% - 8.95% | 9.45% | 11th Jun 18 |
| IIFL PLR | - | 17.50% | 01st Apr 14 |
| GIC Housing Finance PLR | - | 15.00% | 30th Nov -1 |
| IDBI Bank MCLR Base Rate | 8.00% - 8.80% | 9.50% | 12th Jun 18 |
| HSBC Bank MCLR Base Rate | 8.00% - 8.60% | 8.90% | 01st Jun 18 |
| Federal Bank MCLR Base Rate | 8.75% - 9.15% | 9.63% | 16th Jun 18 |
| Edelweiss PLR | - | 17.50% | 30th Nov 15 |
| Andhra Bank MCLR Base Rate | 8.00% - 8.55% | 9.55% | 15th Jun 18 |
| Equitas Small Finance Bank MCLR Base Rate | 13.35% - 15.30% | - | 01st Jun 18 |
| AU Small Finance Bank MCLR Base Rate | 11.65% - 13.15% | - | 07th Jun 18 |
| Ujjivan MCLR Base Rate | 14.70% - 15.45% | - | 20th May 18 |
What is MCLR?
- MCLR is lending rate calculated based on cost of raising new funds for the bank which include the cost of maintaining CRR/SLR, operating costs of banks and tenor premium.
- As MCLR is closely linked to repo rate, it improves the transmission of RBI’s repo rate cut to the end borrower
- Banks publish MCLR for at least five durations which are overnight MCLR, 1 month MCLR, 3 month MCLR, 6 month MCLR and 1 year MCLR. However banks may publish MCLR base rates for more than five periods. The banks may revise the MCLR rate every month
- Interest rate on each floating rate loan would be reset on based on the duration of the MCLR to which it is linked
What is Base Rate?
- Base Rate is the lending rate calculated based on the total cost of funds of the banks and is the minimum interest rate at which a bank can lend except for loans to its own employees, its retired employees and against bank’s own deposits
- All floating and fixed rate loans sanctioned by banks before 1st April, 2016 were priced using base rate as benchmark
- If you check the MCLR and base rate of banks shown above, you will notice that MCLR rates are mostly 5 - 50 bps lower compared to base rate. The reason is that MCLR is based on cost of raising new funds and hence, any changes in repo rates results in changes in cost of borrowings of banks which gets transmitted to MCLR
- Starting from April 2018, RBI has mandated that banks’ base rates be linked to MCLR rates. This is expected to benefit home loan and loan against property borrowers whose loans are linked to base rate. Any increase or decrease in MCLR rates will now automatically be applicable to pre 2016 loans that are benchmarked to base rate.
PLR
- PLR (Prime Lending Rate) is the internal benchmark rate used for setting up the interest rate on floating rate loans sanctioned by Non Banking Financial Companies (NBFC) and Housing Finance Companies (HFC).
- PLR rate is calculated based on average cost of funds.
- NBFC and HFC generally price their loan at discount on their existing PLR.
Which loans are linked to MCLR rate?
Floating rate loans are linked to MCLR rate with effect from April 1st, 2016. Typically, home loan and loan against property schemes are floating rate loans and benchmarked to MCLR rates. Some banks offer fixed rate home loan and property loan under special schemes. Personal loan, business loan, car loan and gold loan are mostly fixed rate loans and are independent of MCLR rates.
| Type of Loan | Type of Rates | Interest Rate |
|---|---|---|
| Home Loan | Floating – MCLR Linked | 8.35% |
| Loan Against Property | Floating – MCLR Linked | 8.50% |
| Personal Loan | Fixed Rate | 10.75% |
| Business Loan | Fixed Rate | 13.50% |
| Gold Loan | Fixed Rate | 10.49% |
| Car Loan | Fixed Rate | 9.25% |
How does MCLR rate works?
Floating rate on your home loan is a function of two parameters; the reset frequency of the interest rate on your loan and spread on the benchmark. These two parameters together will determine the interest rate you will pay on your home loan, mortgage loan or business loan throughout the loan tenure:
- Reset Frequency:The applicable MCLR rate will be the rate corresponding to the interest rate reset frequency of the loan. So, a home loan with a reset frequency of every one year will be priced with the 1 year MCLR as the benchmark and a home loan with a 3 month reset will be price with the 3 month MCLR as the benchmark
- Spread:The next component is spread or the margin that you pay over the bank‘s MCLR for a particular loan type of the bank. The margin would be fixed at time of sanction and can be changed only if there is a significant change in customers’ credit profile. For instance, Bank A has 1 year MCLR of 9.1% and spread of 0.2 % for home loan. The interest rate that you will be charged in this case would be 9.3%.
- When a bank changes its MCLR, interest rate on your floating rate home loan will change accordingly. Banks typically adjust the change in floating rates, by changing the loan tenure and by keeping the EMI constant.
- For instance, if you have taken home loan rate at floating rate of 9% and after a year, your bank decides to lower down the MCLR by 50 bps. Hence, your home loan floating rate associated with MCLR rate will also come down to 50 bps at a rate of 8.50%. In most of the cases, the cut in home loan rate might not result in lower EMI, but your loan tenure will stand reduced.
What is the difference between MCLR and base rate?
Base rate of a bank is calculated based on the following factors -
- Average cost of funds
- Operating expenses
- Minimum rate of return i.e. profit
- Negative carry (loss in interest income) of keeping CRR/SLR
MCLR is calculated on the following factors-
- Marginal or incremental cost of funds which includes cost of raising new borrowings/deposits and minimum rate of return(profit)
- Negative carry on account of CRR
- Operating costs
- Calculated tenor wise based on cost of raising new funds for different tenors
Why MCLR loans are more transparent as compared base rate loans?
The above comparison shows that MCLR rate is more transparent and customer friendly as compared to base rate:
- MCLR is calculated based on the cost of raising new funds and also allows to have differential rates based on the underlying tenure of new funds.
- Cost of raising new funds for banks is closely linked to Repo Rate which makes MCLR rate more responsive to any changes in policy repo rates as compared to base rates.
- Further, MCLR of banks is revised every month as compared to base rate which is revised every quarter which makes MCLR more dynamic as compared to base rate.
Our News - Jun 2018
- 2018-06-19 : HDFC bank raises MCLR by 10 bps
HDFC Bank has raised its MCLR of all tenors. The new rates are in the range of 8.05% to 8.70%. The new rates are effective from June 7. - 2018-06-18 : Axis Bank raises MCLR by 10 bps, leading to hike in loan rates The third largest private sector lender Axis Bank has hiked its lending rates by a marginal 0.10 percentage points across all tenors. The change stands effective from June 18, 2018. The one-year MCLR is now at 8.60%, and six month MCLR is at 8.50%.
- 2018-06-08 : Bank of India hikes MCLR by 0.10% for various tenors Bank of India has hiked the marginal cost of funds-based lending rate (MCLR) by 0.10% or 10 basis points for various tenors. One-year MCLR stands at 8.50% while overnight rate is up by 10 bps at 7.90%. The enhanced rates would come into effect from June 10, 2018.
- 2018-06-06 : RBI hikes Repo rate to 6.25% The RBI in its second bi monthly monetory policy, has decided to increase the repo rate by 25 basis points to 6.25%, from the 6% earlier. Repo rate is the rate at which the central bank infuses liquidity in the banking system. The central bank has revised the rate for the first time since August 2017, and hiked it for the first time in four years. The reverse repo rate also stands adjusted to 6%. The new rates are effective from June 6, 2018.
- 2018-06-06 : Bank of Baroda hikes MCLR by 5 bps Bank of Baroda has hiked its MCLR for the month of June. The rates stand in the range of 7.95% and 8.45%. Six month MCLR is now at 8.30% and that of one year is 8.45%, both up by 5 basis points. The new rates are effective from June 7.
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