Punjab National Bank (PNB) and Bank of India have announced a reduction in their Marginal Cost of Funds Based Lending Rate (MCLR), offering much-needed relief to borrowers. The move comes at a time when many households are grappling with high borrowing costs due to rising interest rate trends in recent years. With this cut, borrowers can expect lower EMIs on home loans, personal loans, car loans, and business loans linked to MCLR.
What is MCLR?
The MCLR (Marginal Cost of Funds Based Lending Rate) is the minimum interest rate at which a bank can lend money. Introduced by the Reserve Bank of India (RBI) in 2016, it ensures transparency in loan pricing. Any cut in MCLR directly reduces borrowing costs for individuals and businesses.
How Borrowers Benefit from the Rate Cut
Lower EMIs: A reduction in MCLR means monthly installments on loans will decrease, easing the financial burden.
Affordable Loans: New borrowers will get loans at a lower interest rate compared to previous months.
Boost to Consumption: With reduced EMI pressure, households may have more disposable income to spend, aiding economic activity.
Effective Date of the Revised MCLR
Both PNB and Bank of India have confirmed that the revised MCLR rates will be effective from the beginning of the new month. Existing borrowers with MCLR-linked loans will automatically benefit from the reduction at their loan reset date.
Should You Switch to an MCLR-Linked Loan?
If you are currently on a base rate or PLR-linked loan, it may be wise to consider shifting to an MCLR or repo-linked loan for greater transparency and lower interest costs.
Key Takeaway
The lending rate cut by PNB and Bank of India is a positive step for borrowers, making loans more affordable and easing EMI payments. This move is expected to provide relief to millions of households and businesses across India.
🔹 FAQs
Q1. What is MCLR in banking?
MCLR (Marginal Cost of Funds Based Lending Rate) is the minimum interest rate below which banks cannot lend.
Q2. How will PNB and Bank of India’s MCLR cut benefit borrowers?
The reduction will lower EMIs on loans such as home loans, car loans, and personal loans, making borrowing cheaper.
Q3. When will the revised lending rates come into effect?
The revised MCLR rates are effective from the start of the new month as per bank notifications.
Q4. Does the rate cut apply to all borrowers automatically?
Borrowers with MCLR-linked loans will benefit immediately, while others may need to shift from base rate/PLR-linked loans.
Q5. Will existing EMIs reduce instantly after the rate cut?
Yes, EMIs linked to MCLR will decrease, but the effect depends on the loan reset date.
Published on : 5th September
Published by : SMITA
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