IOB, BOM raise MCLR by up to 25bps

9 Nov 2022 , 03:19 PM

To reflect the increase in the cost of funds for the state-owned lenders, Indian Overseas Bank (IOB) and Bank of Maharashtra (BoM) increased the Marginal Cost of Funds Based Lending Rate (MCLR) by 5 to 25 basis points across tenors.

In a BSE filing, Chennai-based IOB stated that its revised MCLR for a one-year tenor would be 8.05%, up from the prior rate of 7.90%. Starting on November 10, 2022, the new rates will be in effect. It raised rates in six tenors, from 15 days (a fortnight) to three years, commencing with a 10 basis point increase (25 Bps). It maintained the three-month MCLR at 7.85 %.

The cost of deposits for IOB increased sequentially from 4.04 % in the quarter ending April-June 2022 (Q1Fy23) to 4.11 % in the quarter ending September 2022. (Q2Fy23). Its yield on advances increased from 7.34 % in the first quarter of 2018 to 7.83 % in the second.

The Reserve Bank of India reports that the scheduled commercial banks’ one-year median MCLR increased from 7.75 % in September 2022 to 7.90 % in October 2022. In light of the limited liquidity, lenders have transferred some of the rise in funding costs on borrowers, according to bankers.

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