The loan rates at Kotak Mahindra Bank have gone up across the board by 5 basis points. Starting today, March 16, the updated Marginal Cost of Funds based Lending Rates (K-MCLR) will be in effect.
The overnight K-MCLR is now 8.25% thanks to the private lender. While the rate for a single month has gone up to 8.50%. The KMCLR is fixed at 8.65% for a three-month period and at 8.85% for a six-month period. The bank set the rates at 9.05%, 9.10%, and 9.25% for terms of one, two, and three years, respectively.
The Marginal Cost of Funds based Lending Rate (K-MCLR) for various tenors, effective March 16, 2023
Overnight – 8.25%
One Month -8.50%
Three Month -8.65%
Six Month -8.85%
One Year -9.05%
Two year – 9.10%
Three year -9.25%
Cost of Lending Margin Rate is the lowest rate that a bank may charge consumers for a loan. Lending below that rate is not permitted by the banking institution. The Reserve Bank of India established the MCLR system to put a minimal floor on lending rates for various types of loans.
Once the Reserve Bank of India announced the increase in benchmark policy rates, a number of other commercial banks, in addition to Kotak Mahindra Bank, increased their lending rates as well.
According to a report by India Ratings, the Reserve Bank has increased the policy rates by 250 bps since May last year, which will speed up the transmission of monetary policy. Given the sharp increase in banks’ marginal cost of funds, the system-wide lending rates are expected to soar by 100-150 bps next fiscal. According to the statement, the MCLR section of the credit market would see the majority of the lending rate rises.
The majority of these policy rate increases have been passed on by banks to borrowers; however, when it comes to deposits, they have not been doing so, which has caused a fall in funds across the board, causing banks to raise capital from the market at a considerably greater cost.
Source: mint
