Axis Bank raises MCLR by 10 basis points

This is the second time in the past two months that the bank has hiked its MCLR

Axis Bank has followed other private lenders like HDFC Bank and IndusInd Bank in raising its benchmark lending rate — Marginal Cost of Fundsbased Lending Rates(MCLR) — indicating a trend of raising lending rates.

Axis Bank raised its MCLR by 10 basis points for the following categories: threemonth, six-month, one-year, two-year and three-year. The revised one-year MCLR now stands at 8.4 per cent. This is the second time during the past two months that the bank hiked its MCLR, the last time being in January, when it had hiked its MCLR by 5 basis points.

As hardening bond yields lead to a rise in the cost of funds for banks, the hike in lending rates indicates banks have started transferring this increase of cost to their borrowers.

IndusInd Bank raised its MCLR by 15 basis points this month, bringing its one-year MCLR to 9.10 per cent. The new rates were applicable from February 17. Earlier this month, HDFC Bank hiked its MCLR by 10 basis points.

However, in a contrary move, Bank of Baroda cut its MCLR this month by 10-25 basis points for tenors less than one year. Public sector banks such as State Bank of India and Andhra Bank also lowered their MCLR recently.

The Reserve Bank of India, at the monetary policy press conference in February, said it would link the base rate with MCLR from April 1 to ensure that the customers get benefit of policy rate cuts.