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Bank of Baroda on Tuesday said it will up its marginal cost of funds-based lending rates (MCLR) across tenors by five basis points with effect from June 7.

The public sector bank’s one-year MCLR will be 5 basis points higher at 8.45 per cent against 8.40 per cent now. One basis point equals one-hundredth of a percentage point.

For all other tenors – overnight, one month, three months and six months – the new rates will be 7.95 per cent, 8 per cent, 8.10 per cent and 8.30 per cent, respectively.

Interest rates

The bank, in a statement, said the upward revision in MCLR is due to the higher cost of funds and the rising interest rate scenario.

Interest rate on all rupee loans sanctioned and credit limits renewed with effect from April 1, 2016, are priced with reference to MCLR benchmarks.

In the last one week or so, lenders, including State Bank of India (SBI), Punjab National Bank (PNB), and ICICI Bank, have upped their MCLRs.

SBI, India’s largest bank, has raised its MCLR across tenors by 10 basis points with effect from June 1. The one-year MCLR of the bank is now 8.25 per cent against 8.15 per cent earlier.

Punjab National Bank, too, has increased its MCLR in select tenors by up to 10 basis points across the board with effect from June 1.

The one-year MCLR of PNB, India’s second-largest public sector bank, is now 8.40 per cent against 8.30 per cent earlier.

ICICI Bank has upped its MCLR across tenors by 10 basis points across the board with effect from June 1. The one-year MCLR of the bank is now 8.40 per cent against 8.30 per cent earlier.

“Some banks have now started increasing their MCLRs, which in turn supports the belief that interest rates will remain at elevated levels,” said Madan Sabnavis, Chief Economist, CARE Ratings.

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