Public-sector lender Bank of Baroda has bumped up its marginal cost-based lending rates (MCLR) by 5 basis points across the board, making some floating-rate loans more expensive, effective August 12.

What Happened? The key change comes in the form of an upward adjustment to everything from the overnight MCLR to the one-year MCLR, which is considered a vital benchmark for most loans. The MCLR serves as the minimum lending rate, below which a bank cannot lend to customers. The rate has been raised from 8.65% to 8.70%. 

The overnight MCLR has ticked up from 7.95% to 8.00%. The bank's one-month to six-month MCLR rates now range from 8.25% to 8.45%.

Here’s a breakdown of the changes in rates:

These adjustments will likely make personal and vehicle loans with floating interest rates linked to the MCLR more expensive as equated monthly installments (EMIs) will get more expensive. As a result, individuals may experience changes in their loan repayments, potentially affecting their monthly budgets.

Bank of Baroda's decision to revise its MCLR rates comes days after the Reserve Bank of India held interest rates but urged banks to temporarily increase their cash reserves to address a sudden rise in liquidity within the banking system. The central bank also asked banks to have a more transparent framework in how they price their floating rate interest rate.

It also said it would soon come out with a framework that will allow borrowers to convert a floating rate loan to a fixed rate.  

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