IOB hikes lend­ing rate by 0.05%

The Hitavada - - BUSINESS -

STATE-RUN In­dian Over­seas Bank (IOB) on Fri­day raised its bench­mark lend­ing rate by 5 ba­sis points, a move that will make all its loans costlier. The bank has de­cided to in­crease mar­ginal cost of funds based lend­ing rate(MCLR) by 0.05 per cent across tenors, ef­fec­tive Nov 10, IOB said in a state­ment. MCLR for a one-year tenor will rise to 8.75 per cent from 8.7 per cent. Most of its re­tail loans are bench­marked against one-year MCLR. The rate for a twoyear tenor has been fixed at 8.85 per cent as against the ex­ist­ing 8.8 per cent, while it is 8.95 per cent for a three­year pe­riod. The MCLR mech­a­nism was in­tro­duced in bank­ing sys­tem in April 2016 as an al­ter­na­tive to base rate, be­low which banks can­not lend, for new bor­row­ers. The MCLR is cal­cu­lated on mar­ginal cost of bor­row­ing and re­turn on net worth for banks.

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