The current MCLR rate of BOB Bank is as follows w.e.f. 12.08.2024:

MCLR is the rate below which a bank cannot charge interest on a loan from its customers. MCLR is set by the bank according to the guidelines set by the RBI. It is usually revised half-yearly or on an annual basis. BRLLR is linked to the Repo Rate set by RBI and is revised from time to time. Every bank has a different BRLLR. The BRLLR is changed every time there is a change in Repo Rate.

RLLR is an external benchmark linked to RBI’s Repo Rate. If there is a change in the RBI’s Repo Rate, it would also affect your loan interest rate. There is greater standardisation and transparency if borrowers get loans linked to RLLR. MCLR is an internal benchmarking wherein the bank sets its rate of interest considering its own cost of funds. Not just the Repo Rate, but other factors like banking system liquidity, low-cost deposits, etc., also affect the interest rate.

Functionally, both are similar, as both function as the lower limit of interest rates that a lender can charge the borrower.

The current MCLR rate of SBI is as follows:

Both MCLR and Base Rate are based on the same concept; however, the base rate is determined based on the average cost of funds, whereas the MCLR is based on the incremental or marginal cost of funds. The base rate is calculated by taking into consideration the minimum rate of return or profit margin.

MCLR is calculated based on the loan tenure, i.e. the length of time in which a borrower has to repay the loan. This tenure-linked benchmark is internal. The bank decides the actual lending rate by adding the elements spread to this rate. Banks, then, publish their MCLR rate after careful inspection.

The MCLR enables RBI interest rate changes to be notified to borrowers relatively fast, with regular monthly updates to the MCLR. It enables borrowers to get benefits from the rate reduction implemented by the RBI in a short amount of time.

The current 1-year MCLR of BOB is 8.95% w.e.f. 15.08.2024.

You can contact the concerned bank on their customer care number or visit your nearest bank branch to switch a home loan base rate to MCLR.

MCLR is directly linked with the EMIs of the loan availed by the lender. The rate cut by RBI has a direct impact on the EMIs. MCLR rate determines the monthly installments paid by the borrower against a loan.

The cost of lending varies for the period of the loan. A higher duration of the loan means higher risk involved. To cover the risk, the lender will shift the load to the borrowers by charging a fixed premium. This premium is called the Tenure Premium.

MCLR has internal linking, in which the lenders decide rates after considering their own costs. The repo rate is not the primary factor in determining the rate. Repo-linked lending rates have external linking, which means that with every change in repo rate, the rate of interest changes immediately.

The current MCLR rate of the Bank of Baroda is as follows: