EMI To Be Costly: RBI has made the repo rate expensive in the same way, after which many types of loans including home loan, car loan will now become expensive. On the other hand, the private sector Yes Bank has made loans expensive. Yes Bank has increased the Marginal Cost of Lending Rate i.e. MCLR by 10 to 15 basis points. This increase has come into effect from 2 May 2022.
MCLR increased by how much
According to Yes Bank’s website, from May 2, the bank has reduced the overnight ACLR to 6.85 percent, one-month ACLR to 7.30 and three-month to 7.45 percent, six-month ACLR to 8.25 percent and one-year ACLR to 8.60 percent.
What is MCLR
According to the new guidelines of RBI, now in lieu of base rate, commercial banks pay marginal cost of funds on the lines of based lending rate (MCLR). Marginal Cost of Funds plays an important role in determining the MCLR. Any change in the repo rate results in a change in the Marginal Cost of Funds. When the time comes for home loan customers to review their home loan interest rates, their EMIs will become costlier due to the increase in MCLR.
Many banks have increased MCLR
Earlier, SBI 10 basis points and Bank of Baroda also announced to increase MCLR by 5 basis points. Kotak Mahindra Bank has also increased MCLR. So housing finance company HDFC, giving a shock to home loan customers, has increased the interest rate by 5 basis points, after which old home loan customers will have to pay more EMI.
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