MCLR Rate Feb 2024 – Compare SBI, HDFC, Axis, PNB, BOB,
Compare MCLR lending rates of all banks of India for the month. Compare on the basis of 1 month, overnight, 3 month, 6 month, 1 year, 2 year & 3 year basis. MCLR Rates of SBI, HDFC, ICICI, Axis, Bank of Baroda, Union Bank, United Bank, Indian Bank, LIC Housing Etc.
| Bank | Overnight | 1 Month | 3 Month | 6 Month | 1 Year | 2 Year | 3 Year |
| SBI | 7.95 | 8.10 | 8.10 | 8.40 | 8.50 | 8.60 | 8.70 |
| Axis Bank | 8.70 | 8.70 | 8.80 | 8.85 | 8.90 | 9.00 | 9.05 |
| ICICI Bank | 8.50 | 8.50 | 8.55 | 8.70 | 8.75 | ||
| HDFC Bank | 7.80 | 7.95 | 8.30 | 8.70 | 8.95 | 9.05 | 9.15 |
| Kotak Mahindra | 8.25 | 8.50 | 8.65 | 8.90 | 9.10 | 9.10 | 9.25 |
| Bank of Baroda | 7.90 | 8.20 | 8.30 | 8.40 | 8.55 | ||
| Uco Bank | 7.35 | 7.55 | 7.75 | 8.00 | 8.10 | ||
| United Bank | 7.50 | 8.00 | 8.10 | 8.20 | 8.30 | ||
| Corporation Bank | 7.55 | 7.60 | 8.10 | 8.25 | 8.40 | ||
| IDBI Bank | 7.05 | 7.25 | 7.30 | 7.45 | 7.80 | 8.15 | 8.60 |
| Federal Bank | 8.05 | 8.15 | 8.30 | 8.35 | 8.40 | ||
| Indian Bank | 7.05 | 7.35 | 7.45 | 7.70 | 7.85 | ||
| Central Bank of India | 7.50 | 7.95 | 8.00 | 8.25 | 8.50 | 8.70 | |
| Canara Bank | 7.55 | 7.55 | 7.90 | 8.30 | 8.50 | ||
| Catholic Syrian Bank | 8.50 | 8.60 | 8.90 | 9.00 | 9.80 | ||
| PNB | 8.00 | 8.10 | 8.20 | 8.40 | 8.50 | 8.80 | |
| Indian Overseas Bank | 7.80 | 7.95 | 8.30 | 8.35 | 8.45 | 8.60 | 8.70 |
| DCB Bank | 8.62 | 8.62 | 9.32 | 9.82 | 10.22 | ||
| Bank of Maharashtra | 6.80 | 6.90 | 7.20 | 7.25 | 7.30 | ||
| Union Bank of India | 7.65 | 7.80 | 8.00 | 8.20 | 8.40 | 8.60 | 8.75 |
| IndusInd Bank | 8.60 | 8.65 | 8.95 | 9.10 | 9.15 | 9.20 | 9.25 |
| BNP Paribas | 7.10 | 7.15 | 7.20 | 7.35 | 7.55 | 7.55 | 7.55 |
| P & S Bank | 8.00 | 8.10 | 8.15 | 8.25 | 8.25 | ||
| OBC | 7.50 | 7.50 | 7.80 | 8.00 | 8.15 | ||
| Yes Bank | 7.10 | 7.55 | 7.70 | 8.50 | 8.75 |
Note: * All values in Percentage (%)
Why the MCLR reform needed?
Presently, the banks are slightly slow to change their interest rate in accordance with repo rate changed by the RBI. Commercial banks are extremely depend upon the RBI’s LAF repo to get short-term funds. But, with the periodic change in the repo rate, these banks are unwilling to change their individual lending rates and deposit rates. The objective of changing the repo rate is considered only if the banks are changing their individual deposit and lending rates.
How is MCLR calculated?
It is really important to understand how banks earn profit or churn money. The main function of the banks is to lend money and accept deposits from their customers. The banks make their money on the basis of the difference between the rate of interest of advances and deposits.
How the Standard Lending Rate is being calculated?
The main elements of base rate system are:
- Cost of funds
- Negative carry on account of CRR
- Functional cost of the banks
- Tenure premium.
Negative carry on account of CRR: It is the cost that the banks have to bear during keeping reserve with the RBI. However, the RBI is not giving an interest for CRR held by the banks. The cost of these funds, which remain idle can be taken from loans given to the people.
Functional cost: These are functional expenses to run the banks.
Tenure premium: It suggests that the higher rate of interest can be charged from long tern loans.
Marginal cost: The marginal cost of funds includes Marginal cost of borrowing and return on net worth.
The marginal cost of borrowings shall have a weightage of 92% of Marginal Cost of Funds, however return on net worth will have the balance weight-age of 8%.
It shows that the MCLR is determined largely by the marginal cost of funds and especially by the deposit rate and by the repo rate. Any marginal change in the repo rate will also affect the marginal cost and therefore the MCLR should also be changed.
Difference between MCLR & Base Rate
The banks calculate the standard lending rate on the basis of the following factors:
- Cost of the funds (interest rate given for deposits)
- Functional expenses/running cost
- Cost of CRR
Whereas, the MCLR is included the following major elements:
- Marginal cost of funds
- Negative carry on account of CRR
- Functional cost/running cost
- Tenure premium
It is evident with the above points that the CRR costs and operating expenses are the common factors for both base rate and the MCLR. The factor minimum rate of return is specifically excluded under MCLR.
The main difference is the careful calculation of Marginal costs under MCLR. But, under base rate, the cost is calculated on the average basis by simply averaging the interest rate incurred for deposits. The need to revise MCLR on monthly basis makes it more dynamic as compared to the base rate.
Key guidelines of MCLR by RBI
- MCLR will be base on tenure instead of a single rate. This will enable the banks to more strategically price loan at different tenures based on different MCLRs, according to their funding compositions and strategies.
- All the banks required to review and publish their MCLR of different maturity every month on a pre-fixed date.
- The final lending rates should be based on by adding the spread to the MCLR.
- Banks may mention interest reset dates on their floating rate loans.
- The duration of reset can be maximum one year or less than that.
- MCLR prevailing on the day the loan is sanctioned and will remain same till the next reset date.
- The existing loan borrowers with loans linked to Base Rate can continue with base rate system till repayment of loan. Existing customers will have the option to switch their loan to MCLR system.
- But switching back to base rate from MCLR system is not allowed.
- Banks are not allowed to lend money below the MCLR except for few categories like loan against deposits, loan to bank’s own employees.
- Personal loans, auto loans, and fixed rate home loans, etc., will not be linked to MCLR.
Marginal Cost of Funds Lending Rates (MLRC), New reforms by RBI
The Reserve Bank of India has brought new reforms of setting lending rates. According to this new reform, the commercial banks under the title of Marginal Cost of Funds base Lending Rate (MCLR) will set lending rates. This new system will amend the present base rate system with the effect of 2016 onward.
According to the new guidelines of RBI, the banks have to set Marginal Cost of Funds based Lending Rate, which will work as internal standard lending rates. On the basis of MCLR, the rate of interest for various customers should be fixed in keeping the risk factor in mind.
The banks should revise the MCLR on monthly bases keeping these new guidelines and factors, which also include the repo rate and other borrowing rates. The repo rate and other borrowing rate that were not exclusively considered under the base rate system.
In the pretext of new guidelines, banks have to create five benchmark rates for different tenure or time periods ranging from one day rate to one year rates. This new method of lending rates will use the marginal cost or latest cost conditions reflected in the interest rate given by the banks for obtaining funds at the time of fixing their lending rate. According to this, the interest rate given by a bank deposits and the repo rate are the decisive factors in the calculations of MCLR.
