The bank gave a big shock to customers in the new year! EMI increased in one stroke from interest rate –

Bank of Baroda gave a big shock to the customers in the new year. This bank loan is going to be more expensive. As a result it will have an impact on the EMI as well. Bank of Baroda has decided to increase the interest rate on its loans by 35 basis points. This new rule came into effect from January 12. As a result, all types of loans from these banks have become more expensive.

A rise in Marginal Cost Lending Rate or MCLR of bank loans will have a direct impact on EMI. Customers will have to pay more EMI from this time due to increase in MLCR. Most of the customers are given loans based on one year MCLR. In this situation, the pressure on customers will increase a lot. Bank of Baroda announced the implementation of this new rule on January 12.

From this time, the one-day MCLR has increased from 7.5 percent to 7.85 percent. One month, three months, six months and one year MCLR has been increased by 0.2 percent. As a result, the new MCLRs are 8.15 percent, 8.25 percent, 8.35 percent and 8.5 percent respectively. Note that the Reserve Bank has increased the repo rate five times in 2022. They have taken this step to control the high inflation. From May to December 2022, the policy rate increased by 2.25 percent.

Earlier on December 7, the repo rate was increased by 0.35 percent. As the repo rate rises, all banks make their loans more expensive. Bank of Baroda also put pressure on customers last December. The bank increased MCLR by 30 basis points in December 2022. Once again the MCLR has been increased by the bank.

The question is, what is MCLR? In simple terms, it is a benchmark given by the Reserve Bank. Based on this all banks fix the interest rate on their loans. On the other hand, repo rate is the interest rate at which the Reserve Bank lends money to other banks. So if the repo rate goes down, the MCLR goes down and the bank loan becomes cheaper. Conversely, increasing the MCLR makes bank loans more expensive.

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