For borrowers with MCLR-linked loans, this increase will result in higher EMI outgo.
The one-year MCLR has gone up from 7.35 to 7.50 percent as a result of the modification. A 15 basis point increase has been made to the one-month, and three-month and 6 month MCLRs, bringing them to 7.05, 7.10, and 7.20 percent, respectively. The overnight and 3 year has been kept unchanged at 2.90 and 7.70 percent.
As an alternative to the base rate system, the Marginal Cost of Funds Based Lending Rate (MCLR) was introduced. It serves as a benchmark that banks must not fall below while making loans. The MCLR varies with tenor and might be anywhere between one day and three years.
The Reserve Bank of India has raised the repo rate by 90 basis points (bps), bringing it to 4.90 percent. Interest rates are expected to rise more in the upcoming months as a result of geopolitical unrest and inflationary worries.