If you have a loan with Bank of Baroda or Canara Bank, or are planning to take a new loan from either bank, this news is important for you.
Both public sector banks have increased their MCLR (Marginal Cost of Funds Based Lending Rate) for some tenors.
The new rates will be effective from August 12, 2026. This change could affect the interest rate and EMI of loans linked to MCLR.
The change comes after the Reserve Bank of India kept the repo rate unchanged at 5.25% during the Monetary Policy Committee (MPC) meeting held on August 5, 2026.
About a week later, both banks revised their MCLR for selected tenors.
Canara Bank Increases MCLR by 5 Basis Points
Canara Bank has increased its MCLR by 5 basis points for selected tenors. One basis point is equal to 0.01%. After the revision, the bank’s MCLR ranges from 7.95% to 9.10%, depending on the loan tenor.
The overnight MCLR remains unchanged at 7.95%. However, the one-month MCLR has increased from 8% to 8.05%, while the three-month MCLR has gone up from 8.25% to 8.30%.
The six-month MCLR has increased from 8.60% to 8.65%. The one-year MCLR has also increased from 8.75% to 8.80%. Meanwhile, the two-year and three-year MCLR rates have increased to 9.05% and 9.10%, respectively.
Bank of Baroda Hikes MCLR by 10 Basis Points
Bank of Baroda has also increased its MCLR for selected tenors. The bank has raised its three-month MCLR by 10 basis points, from 8.20% to 8.30%.
However, the overnight MCLR remains unchanged at 7.85%, while the one-month MCLR continues at 7.95%. The six-month and one-year MCLR have also remained unchanged at 8.50% and 8.75%, respectively.
After the revision, Bank of Baroda’s MCLR ranges from 7.85% to 8.75%, depending on the tenor.
What is MCLR?
MCLR stands for Marginal Cost of Funds Based Lending Rate. In simple terms, it is the minimum interest rate below which a bank generally cannot lend.
The Reserve Bank of India introduced the MCLR system in 2016. For customers whose loans are linked to MCLR, any change in this benchmark can affect the cost of the loan.
Depending on the situation, it can lead to a higher EMI or a longer loan repayment period.
However, the actual impact will depend on the type of loan, its interest rate reset date, and the terms and conditions of the bank.
How Will Customers Be Affected?
The increase in MCLR is mainly important for customers whose home loans, personal loans, or other loans are linked to this benchmark.
If the interest rate on such a loan is revised during its reset period, the borrower may have to pay a higher interest amount. This could increase the EMI or affect the overall loan repayment period.
The exact impact will depend on the loan agreement, the applicable MCLR, and the reset terms of the respective bank.