Indian Overseas Bank increased the marginal cost of the funds-based lending rate (MCLR) by ten basis points.

“A similar amount revised the two-year and three-year MCLRs to 7.80%. The overnight MCLR was charged 7.05%, while the one-month charge was 7.15%. The three-month and six-month MCLRs were charged at 7.05%. The increase is 7.7% respectively. The revised MCLR will come into effect on September 10, 2022,” Indian Overseas Bank said in a regulatory filing. The move will make consumer loans more expensive.

The bank reported a 20.1% rise in net profit to Rs 392.18 crore in Q1FY23, although total revenue fell 2.5% to Rs 5,028.2 crore from Q1FY22.

Indian Overseas Bank is one of 12 public sector banks (PSBs) in which the Government of India holds a 96.38% stake as of June 30 2022. They are followed by institutional investors, the public and others.

Meanwhile, the Bank of Baroda has also decided to increase its MCLR by 0.1%, which will take effect from September 12, 2022.

“Bank of Baroda’s one-year MCLR is priced at 7.8% instead of 7.7%,” the bank said in a regulatory filing.
The six-month MCLR will rise from 7.55% to 7.65%, while the three-month MCLR will rise from 7.45% to 7.50%.
Many banks have raised lending rates after the Reserve Bank of India (RBI) hiked the repo rate by 140 basis points this fiscal year. The central bank is expected to raise interest rates further to curb high inflation.

RBI norms require banks to review their monthly lending rates based on the marginal cost of funds.