Yes Bank Hikes MCLR; How Much Will Home Loan, Car Loan EMIs Go Up?

Leading private lender Yes Bank has increased its MCLR rates. The marginal cost of lending rate, or MCLR, a key point in deciding loan interests, has been hiked, the bank has said in an announcement. The new Yes Bank MCLR rates have already come into effect, as per a note on the lender’s website The move comes almost a month after the Reserve Bank of India hiked its repo rates to 4.90 per cent against a backdrop of rising inflation in the country.

The new Yes Bank MCLR rates have come into effect from July 1. The Yes Bank MCLR rate hike will mean that loan interests for new and existing borrowers are set to increase, including equated monthly installments (EMIs) for home loan, vehicle loan and any other loan related to marginal cost. This is a direct result of the RBI hiking its repo rates, as any tweak in repo rate will also affect the marginal cost and hence change the MCLR.

Yes Bank MCLR rates for overnight, one month and six months have been hiked to 7.60 per cent, 7.90 per cent and 8.25 per cent. For tenures of six months and one year, the Yes Bank MCLR rates are 8.70 per cent and 8.95 per cent, respectively.

The base rate of Yes Bank effective from June 1 is 8.75 per cent, the bank said on its website in a note. On the other hand, Yes Bank BPLR rate effective from July 26, 2011 is is 19.75 per cent, it added.

“As per RBI guidelines, all new floating rate personal or retail loans and floating rate loans to MSMEs are to be based on External benchmark. Effective April 01, 2022, the Bank has shifted from 6 Month Certificate of Deposit rate to RBI Repo rate as reference rate for lending based on external benchmark with appropriate mark-up,” said Yes Bank on its website.

“The RBI Repo rate applicable from July 01, 2022 is 4.90 per cent. The Bank shall add spread components as per Bank’s spread framework. For existing loans linked to 6 M CD rate, rate applicable from July 01, 2022 is 5.73 per cent,” added the lender.

MCLR or marginal cost of lending rate is a benchmark interest rate, which is the minimum rate of interest banks are allowed to give out loans to its customers. It dictates the lower limit of the interest rate for a loan. This rate limit is set in stone for borrowers unless specified otherwise by the Reserve Bank of India. With the increase in the MCLR, Yes Bank home and other loan borrowers may not be happy as the interests are most likely to go up.