PNB announced new MCLR rates, Check Here!!

Punjab National Bank (PNB) has announced new (MCLR) Marginal Cost of Funds Based Lending Rate (MCLR) with effect from 01.08.2025 as under: –

MCLR TENOR	Existing w.e.f. 01.07.2025	Revised w.e.f. 01.08.2025
Overnight	8.20%	8.15%
One Month	8.35%	8.30%
Three Month	8.55%	8.50%
Six Month	8.75%	8.70%
One year	8.90%	8.85%
Three years	9.20%	9.15%

Further, existing Repo linked Lending Rate (RLLR) i.e. 8.35% (including BSP of 0.10%) and Base Rate i.e. 9.50% remain unchanged.

What is MCLR?

MCLR, or Marginal Cost of Funds Based Lending Rate, is the minimum interest rate below which a bank cannot lend (except in some cases allowed by the Reserve Bank of India). It is used by banks in India to determine the rate of interest for loans such as home loans, car loans, and personal loans.

Key Points About MCLR:

1. Introduced by RBI in April 2016
   MCLR replaced the older Base Rate system. It was introduced to make lending rates more transparent and responsive to changes in the RBI’s monetary policy.
2. Why is it called “Marginal Cost” based?
   Because it takes into account the current cost at which banks raise funds (mainly through deposits), rather than just historical or average costs.
3. What factors are used to calculate MCLR?
   • Marginal cost of funds (including interest rates paid on deposits)
   • Operating costs of the bank
   • Tenure premium (extra cost for long-term loans)
   • Cost of maintaining the Cash Reserve Ratio (CRR)
4. Different MCLR rates for different tenures
   Banks declare MCLR rates for various tenures like overnight, one month, three months, six months, one year, etc. The interest rate of your loan depends on which MCLR tenure it is linked to.

Why is MCLR important for borrowers?

If your loan (home loan, personal loan, etc.) is linked to MCLR, your EMI may change when the MCLR is revised. While banks may update the MCLR monthly, your loan contract typically has a reset period (for example, every six months or one year), which decides when your EMI will be revised.

MCLR vs Other Lending Rates:

Parameter	MCLR	RLLR (Repo Linked Lending Rate)
Linked to	Bank’s internal cost of funds	RBI’s repo rate
Market responsiveness	Lower	Higher
Transparency	Moderate	High