Mumbai : The public sector Bank of Boroda has increased the Marginal Cost based lending Rates (MCLR) by 5 basis points (bps) across all tenures. While the overnight MCLR has been increased from 7.95% to 8.00%, the one month MCLR has been increased to 8.05%, 3 month MCLR to 8.15%, 6 month MCLR to 8.35% and 1 year MCLR to 8.50%. The revised rates will be effective from 7th July.
The marginal cost of funds based lending rate (MCLR) refers to the minimum interest rate of a bank below which it cannot lend, except in some cases allowed by the RBI. It is an internal benchmark or reference rate for the bank. MCLR actually describes the method by which the minimum interest rate for loans is determined by a bank – on the basis of marginal cost or the additional or incremental cost of arranging one more rupee to the prospective borrower. The MCLR methodology for fixing interest rates for advances was introduced by the Reserve Bank of India with effect from April 1, 2016. This new methodology replaces the base rate system introduced in July 2010.