Bank of Baroda and Canara Bank Hike Lending Rates by 5 Basis Points Ahead of June 12 Rollout Bank of Baroda and Canara Bank have raised their Marginal Cost of Funds Based Lending Rates by 0.05 percent across select tenors. The revised rates will come into effect on June 12, pushing up monthly loan repayments. Borrowers dealing with state-run lenders are set to face higher borrowing costs as Bank of Baroda and Canara Bank have introduced an upward revision in their Marginal Cost of Funds Based Lending Rates (MCLR). Both public sector banks have raised their lending benchmark by 5 basis points, equivalent to 0.05 percent, across select tenors. These updated rates will take effect on Friday, June 12, directly driving up interest obligations and borrowing costs on all loans pegged to the respective banks' MCLR metrics. Understanding the Role of the MCLR Benchmark The adjustment comes just one week after the Reserve Bank of India (RBI) decided to maintain the benchmark repo rate at 5.25% during its monetary policy meeting held on June 5, 2026. The MCLR serves as the internal floor rate below which commercial banks and financial lending institutions are legally barred from granting credit to borrowers. Established to improve rate transmission and ensure transparency in lending operations, the RBI initially rolled out the MCLR framework back in 2016. Tenor-Wise Rate Revisions at Bank of Baroda Bank of Baroda has implemented an increase of 5 basis points, or 0.05 percent, across five specific maturity tenors. The bank's overnight MCLR has been marked up from 7.80% to 7.85%, while the benchmark for a one-month tenor moves from 7.90% to 7.95%. These short-term rates reflect the rising costs in immediate and month-long financial funding requirements. For intermediate-term maturities, the three-month MCLR has climbed from 8.15% to 8.20%, and the six-month tenor rate has been adjusted from 8.45% to 8.50%. Crucially, the one-year MCLR, which is commonly utilized by public lenders as the core benchmark for standard retail credit lines including consumer finance and long-term advances, was pushed upward from 8.70% to 8.75%, representing a uniform 5-basis-point increase across the board. Canara Bank Adjusts Rates for Short-Term Maturities Canara Bank has simultaneously recalculated its rate structure, applying a 5-basis-point upward revision focused on shorter-duration loan tenors. The lender's overnight MCLR has risen from 7.90% to 7.95%. Following the same proportion, the one-month tenor has moved up from 7.95% to reach the 8.00% mark. Further up the duration ladder, Canara Bank's three-month rate has been revised from 8.20% to 8.25%, and the six-month MCLR now stands at 8.60%, up from the earlier 8.55%. The bank has kept all other loan tenors outside these specific short-term brackets unchanged, leaving the rest of its broader lending schedule unaltered for the time being. What this means for you Borrowers with loans linked to the MCLR framework at these two state-owned lenders will see higher interest expenses and increased monthly instalments. • Impact on Existing Borrowers: Customers servicing floating-rate advances tied to these tenors will witness an upward adjustment in their EMIs or loan tenure upon their scheduled reset dates. Borrowers can check their net banking accounts or contact branches to calculate the specific increment applicable to their repayment plans. • Impact on New Applicants: Individuals taking fresh advances from Bank of Baroda or Canara Bank starting June 12 will face higher benchmark rates from day one. Potential borrowers should compare tenor options carefully before finalizing credit terms to minimize the extra interest outflow. • Retail Loan Costs: Bank of Baroda's 5-basis-point increase in its one-year MCLR directly alters the base rate for key retail borrowings like vehicle and consumer loans. Over extended repayment schedules, even a 0.05% bump contributes to a noticeable difference in total interest paid. • Unchanged Tenors at Canara Bank: Canara Bank has left several longer-tenor brackets intact, sheltering borrowers linked to those specific tiers from an immediate rate rise. Borrowers tied to unaffected tenors will continue servicing their credit under their preexisting schedule without immediate changes. Why this happened The rate hikes stem from internal reviews of marginal funding expenses following the central bank's policy decision to maintain steady interest benchmarks. • Marginal Cost of Funds: The MCLR formula calculates baseline lending rates based on marginal deposit costs, operating overheads, and cash reserve ratios. A slight uptick in the short-to-medium-term cost of securing fresh funds led both lenders to mark up rates by 5 basis points. • RBI Monetary Stance: On June 5, 2026, the Reserve Bank of India held the policy repo rate flat at 5.25%. Without an easing signal or rate cut from the central bank, commercial lenders adjusted their internal pricing structures to match ongoing liabilities. • Selective Tenor Pressures: Rather than a blanket increase across all borrowing windows, the adjustments were targeted at specific durations. Canara Bank limited its upward adjustment strictly to tenors up to six months, reflecting precise funding pressures in short-term asset management. Questions & Answers 1. By how much have Bank of Baroda and Canara Bank raised their lending rates? Both lenders have increased their MCLR by 5 basis points, which equals 0.05 percent, across select tenors. 2. When do the new interest rates come into effect? The revised lending rates for both public sector banks take effect on Friday, June 12. 3. What is Bank of Baroda's revised one-year MCLR? Bank of Baroda's one-year MCLR has been raised from 8.70% to 8.75%. 4. Which tenors were modified by Canara Bank? Canara Bank revised rates for overnight, one-month, three-month, and six-month tenors, leaving the rest unchanged. 5. What was the RBI's decision on the repo rate during its recent meeting? The Reserve Bank of India held the policy repo rate unchanged at 5.25% during its meeting on June 5, 2026. 6. When was the MCLR regime introduced? The Reserve Bank of India introduced the Marginal Cost of Funds Based Lending Rate system in 2016. https://trendkia.com/en/money/bank-of-baroda-aura-canara-bank-ke-karjadaron-para-barha-byaja-ka-bojha-12-juna-se-lagu-hongi-nai-daren-36064 TrendKia — Har trend, sabse pehle.