If you are planning to take a loan for a home, car, or personal needs, this news is important for you. Due to rising inflation and changing conditions in the banking sector, Canara Bank has increased its interest rates.
Because of this decision, customers may have to pay higher monthly installments (EMIs).
The new interest rates came into effect on March 12, and this change could affect the EMIs of millions of the bank’s customers.
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MCLR Increased by 10 Basis Points
Canara Bank has increased its Marginal Cost of Funds Based Lending Rate (MCLR) by 10 basis points (0.10%). MCLR is the minimum interest rate at which banks offer loans to their customers.
When the MCLR increases, the cost of most loans also goes up. This means borrowers may have to pay higher EMIs on loans taken from the bank.
New MCLR Rates Explained
The bank has mainly increased the interest rates for long-term loans. The revised rates are:
2-year MCLR: Increased from 8.85% to 8.95%
3-year MCLR: Increased from 8.90% to 9.00%
However, the bank has not changed the short-term rates (from overnight to 1 year). This brings some relief to customers who have taken short-term loans.
Who Will Be Affected the Most?
This decision will mainly affect customers who have taken home loans, personal loans, or business loans from Canara Bank.
Existing customers: Those whose loans are linked to MCLR and whose reset date is approaching may see their EMI increase soon.
New customers: People who take a new loan from the bank will now have to borrow at a higher interest rate than before.
How Much Can Your EMI Increase?
For example, if someone has taken a ₹50 lakh home loan for 15 years, a 0.10% increase in the interest rate can raise the monthly EMI by around ₹300 to ₹500.
Although this increase may seem small at first, it can add up to several thousand rupees of extra payment over the full loan period.