By CNBCTV18.com STI (Update)

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After the review, the bank‘s lending rates are between 7.00 and 8.10%.

Union Bank of India has increased the marginal cost of funds based lending rate (MCLR) from 0.05% to 0.35% across all tenors. As a result, the equivalent monthly installments (EMI) will become costly for those who benefit from loans compared to the MCLR.

After the review, the bank’s lending rates are between 7.00 and 8.10%.

Mandate Previous loan rates Revised loan rates
Overnight 6.95% seven%
A month 7.10% 7.15
Three months 7.30% 7.35%
Six months 7.50% 7.55%
One year 7.70% 7.75%
Two years 7.75% 7.95%
Three years 7.75% 8.10%

As mentioned, EMIs will be expensive for those who take out loans against the MCLR.

Many banks have raised their lending rates following a 140 basis point hike in the repo rate by the Reserve Bank of India (RBI) so far this fiscal year. The central bank should raise interest rates further to control high inflation.

Reserve Bank of India standards require banks to revise their lending rates every month based on the marginal cost of funds.

Typically, when RBI raises the repo rate, it increases the cost of funds for banks. This means banks will have to pay more for the money they borrow from RBI. Therefore, banks pass the cost on to borrowers by raising the interest rates on their loans, making EMIs more expensive.

As a result, new and existing borrowers are witnessing an increase in interest rates on their loans.