IndusInd Bank increases loan rates; RBL Bank reduces MCLR by 10 bps

IndusInd Bank increases loan rates; RBL Bank reduces MCLR by 10 bps

IndusInd Bank increases loan rates; RBL Bank reduces MCLR by 10 bps

IndusInd Bank, a prominent private sector lender, has recently announced an increase in its marginal cost of funds-based lending rates (MCLR) for specific tenures, raising them by up to 10 basis points (bps). Effective from June 22, 2023, the revised lending rates have come into effect as stated on the bank’s official website. Consequently, the overnight to three-month MCLR rate has been raised by 10 bps, while the six-month lending rate has seen an increase of 5 bps.

The current overnight MCLR rate stands at 9.35 percent. The MCLRs for one-month, three-month, and six-month tenures have been adjusted to 9.40 percent, 9.70 percent, and 10 percent, respectively. Furthermore, the one-year MCLR, which impacts various consumer loans, now stands at 10.20 percent, while the two-year and three-year MCLRs have been set at 10.25 percent and 10.30 percent, respectively.

On Thursday, shares of IndusInd Bank experienced a decline of 0.77 percent, trading at Rs 1,276.70 per share. Despite this, the banking stock has witnessed a 4 percent gain thus far in 2023 and an impressive 64 percent increase over the past year.

RBL Bank, based in Mumbai, has taken a different approach by reducing its MCLR by 10 bps across all tenures starting from June 22, 2023. The overnight MCLR has been lowered from 9.25 percent to 9.15 percent, signifying a decrease of 10 bps. Similarly, the one-month MCLR has dropped from 9.30 percent to 9.20 percent, as reported on the bank’s official website.

Additionally, RBL Bank has reduced its three-month MCLR by 10 bps to 9.50 percent, down from the previous rate of 9.60 percent. The six-month MCLR has also experienced a reduction of 10 bps, now standing at 9.90 percent compared to the earlier rate of 10 percent.

During Thursday’s trading session, RBL Bank shares declined by 2.85 percent, amounting to Rs 167.25 per share. While the bank’s shares have fallen by 8 percent on a year-to-date basis, they have surged by an impressive 95 percent over the past year.

Customers with loans tied to MCLR, including home, personal, or auto loans with floating interest rates, will benefit from the MCLR cut. Changes in the repo rate directly influence MCLR rates.

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As anticipated by many, the Reserve Bank of India (RBI) recently announced its decision to maintain the repo rate, the key policy rate, at 6.5 percent. This marks the second consecutive month that the repo rate has remained unchanged.

Last year, the central bank initiated a cycle of interest rate hikes in May to control inflation, after maintaining low interest rates throughout the Covid-19 pandemic to stimulate economic growth. The repo rate was raised by a total of 2.5 percent (250 bps) during this hike cycle, leading to increased borrowing costs for both consumers and industries.

About IndusInd Bank:

IndusInd Bank Limited, an Indian financial services company with its headquarters in Mumbai, was established in April 1994 under the guidance of the former Union Finance Minister, Manmohan Singh.

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