Bank of Baroda on Friday hiked its benchmark lending rate by 0.1% or 10 basis points. 1 basis point is one-hundredth of a percentage point. The announcement was made a day after RBI maintained status quo in its first monetary policy review meet of the fiscal year 2018-19.

With the increase, the MCLR or marginal cost of funds based lending rate now stands at 8.4% for 1 year tenure. The statement released by the state-run bank said that the revised MCLR rates shall come into effect from April 7. Also, the statement said that similar cut has been made effective for other loan tenures.

The increase in benchmark lending rate will make home and other loans linked to 1-year MCLR expensive marginally.

Early in this week as part of the RBI's directive SBI hiked its base rate to 8.7% to align it with MCLR rate while Allahabad bank reduced it. It was the first time SBI increased its base rate in the last five years.

Even though RBI has maintained a status quo in its monetary policy review by keeping key rates unchanged, view is that in general lending rates are set to see a raise in a couple of months triggered by a host of factors.

The MPC revised its estimates of real GDP for the H1 of FY 2018-19 growth higher to 7.4% in comparison to 7.2%, which is said to be "broadly in line with the forecast in the Economic Survey".

While at the same time reduced inflation estimates on the back of reduced food prices. For the last qtr of the FY 2017-18, inflation is revised lower at 4.5% as against 5.1%.

With PTI Inputs