AU Small Finance Bank MCLR Rates, AU Small Finance Bank Base Rate – May 2022

AU Small Finance Bank offers the following loans to its customer on these rates currently:

AU Small Finance Bank revises its MCLR rate on a monthly basis. Latest MCLR rates of AU Small Finance Bank as announced on 07 May 2022 are:

• Overnight MCLR Rate is 8.75%.
• 1 Month MCLR Rate is 7.75%.
• 3 Month MCLR Rate is 8.05%.
• 6 Month MCLR Rate is 8.90%.
• 1 Year MCLR Rate is 10.15%.
• 2 Year MCLR Rate is 10.60%.
• 3 Year MCLR Rate is 10.60%.
• 5 Year MCLR Rate is 0.00%.

• Effective 1st April 2016, AU Small Finance Bank has been directed by RBI to fix its loan interest rates benchmarked to MCLR rate which is based on its marginal cost of funds. Earlier, the bank fixed its loan interest rates to Base Rate, which was based on total cost of funds of the bank. AU Small Finance Bank MCLR rates for different tenors range from 7.75% to 10.60%.
• RBI allows banks to set their own MCLR Rate based on their marginal cost of funds which means the cost of raising new funds for the bank. So, AU Small Finance Bank decides and announces its MCLR rate regularly based on prescribed formula and policy rate changes by RBI in its monetary policy.
• Note that the RBI does not decide the MCLR Rate of any bank. RBI only announces the repo rate, which influences the cost of raising new funds for the bank. Banks may or may not decide to change their MCLR rate in response to changes in the repo rate. For instance, AU Small Finance Bank may decide to bring a lower cut in their MCLR rate compared to a Repo Rate cut. If RBI cuts the repo rate by 50 basis points or 0.5%, AU Small Finance may decide to cut its MCLR rate only by 0.25% based on its internal funding and liquidity position. Hence, it is important to compare the MCLR rate change of AU Small Finance Bank with that of RBI Repo Rate and MCLR Rate changes of other banks before taking a decision to take a loan from AU Small Finance Bank.
• MCLR rate can be revised by AU Small Finance Bank every month. However, it is not mandatory for AU Small Finance Bank to revise its rate every month and it may choose to retain the same rate for a longer period keeping them unchanged.
• As per the latest regulations given by RBI, with effect from April 1, 2019, all floating interest rates on retail loans are to be linked to external benchmark lending rates. These could be the RBI's repo rate, three-month treasury bill yield, six-month treasury bill yield or other benchmark rate published by the Financial Benchmarks India Pvt Ltd.This was done in view to promote the easier transmission of reduced interest rates to customers, which was not well done when rates were linked to MCLR.