2 Top Banks Revise Lending Rates: Check Details Here

Private bank, ICICI Bank and a public sector bank Punjab National Bank have revised their marginal cost-based lending rates (MCLR) for June 2023. They have increased it by a few basis points for specific terms and reduced it for some.

However, the revision is such that, it is going to impact the equated monthly installment (EMI) of a borrower, making it expensive if it's above six months. The revised rates are made effective from 1st June 2023 on various personal loans and home loans. The details are given below.

ICICI Bank

The private lender has slashed MCLR rates on a one-and three-month period. For one-month term, it is reduced to 8.35% from 8.5% and for three months, it is cut by 15 basis points to 8.4% from 8.55% while keeping the overnight rate untouched.

But for six months and one-year terms, the rates spiked by 5 basis points to 8.75% and 8.85% respectively.

Term	Revised MCLR
Overnight	8.35%
One month	8.35%
Three months	8.40%
Six months	8.75%
One year	8.85%

(Source:Bank website)

Punjab National Bank

This public sector entity has increased its MCLR rates by 10 basis points for all the terms. The rate for overnight is increased to 8.1% from 8% earlier. While the rates for one-month, three-month, and six-month terms have been increased to 8.2%, 8.3%, and 8.5%, respectively.

Additionally, the rates for one-year and three-year terms are hiked to 8.6% and 8.9% along with Repo linked lending rate (RLLR) from 8.75% to 9 %.

Term	Revised MCLR
Overnight	8.10%
One month	8.20%
Three months	8.30%
Six months	8.50%
One year	8.75%
Three years	8.90%

(Source:Bank website)

What is MCLR

The Marginal Cost Based Lending Rate is the minimum interest rate that a financial institution charges for a specific loan. It indicates the lower limit of the interest rate for a loan. After April 1, 2016, all floating rates are based on MCLR.

This rate limit is set by borrowers unless otherwise specified by the Reserve Bank of India. While disbursing loans, the banks generally take into account the MCLR prevailing on that day. Banks also allot reset dates of the loans and the interest rate will change to the MCLR prevailing on the reset date.

The periodicity to reset is generally one year or lesser depending on the loan agreement with the bank. The loans linked to MCLR will come with a spread band. It means the amount or margin that the borrowers have to pay over the MCLR.

Banks have the liberty to set the range of spread on different loans. The deposit rates, repo rates, operating costs, and the cost of maintaining the cash reserve ratio generally determine the MCLR rate. Thus any change in the repo rate impacts the MCLR rate.

Scrip Info

The stock price of ICICI Bank and Punjab National Bank ended at Rs 936. 05 per share, and Rs 51.71 per share, down by 1.31% and 0.27% in Thursday's trading, respectively