Thursday, February 22, 2024

Home Loan Rates: Good news for loan borrowers! Bank of Baroda cuts interest rates

Home Loan Rates: Even though RBI has not changed the interest rates 6 consecutive times in its credit policy, but many government banks have offered cheap loans to their customers. Now Bank of Baroda has announced a reduction in loan rates. The bank has cut the marginal cost of funds-based lending rate (MCLR) by 0.05 percent. 

Bank of Baroda made loan cheaper

Bank of Baroda has implemented this reduction of loan rates for its lakhs of customers from June 12, 2021. After this deduction, now the 1-year MCLR of Bank of Baroda will be 7.35 percent. Apart from this, the MCLR has also been reduced by 0.05 percent to 7.20 percent and 7.10 percent for the period of 6 months and 3 months. 

PNB had also reduced rates 

Earlier, Punjab National Bank and Canara Bank had also cut MCLR rates. PNB had reduced the MCLR by 0.05 percent to 7.30 percent. These new rates have come into effect from June 1, 2021. PNB had cut the MCLR by 0.10 percent for the period of 6 months and 3 months. After this, the interest rates for these tenors have become 7 percent and 6.80 percent. There has been no change in the MCLR for overnight, one month, and 3-year tenors.

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Canara Bank also made loans cheaper

Canara Bank has made changes in the Marginal Cost of Funds Based Lending Rate (MCLR) and Repo Linked Lending Rate (RLLR). The new rates have come into effect from 07 May 2021. Canara Bank claims that it is offering loans to customers at the lowest rates. Canara Bank is offering MCLR based loan at 7.35%. Whereas RLLR (Repo Linked Lending Rate) based loan is offering at 6.9%. 

What is the difference between MCLR and RLLR?

First, banks used the Prime Lending Rate (PLR) to decide the interest rates, followed by the Base Rate, then on April 1, 2016, the Marginal Cost of Funds Based Lending Rate (MCLR) was implemented, assuming MCLR. To a large extent, transparent, but when all these failed to provide relief to the customers, the RBI implemented the external benchmark-based lending rate. At the behest of RBI, many banks have linked their home loans to the repo rate. With this move, the borrowers taking loans benefit from the reduction in the repo rate. At the same time, there is a loss when the repo rate increases. Repo rate is the rate at which banks borrow from RBI.

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