Consumer loans are getting costlier. Bank of Baroda, Canara Bank and UCO Bank have raised their benchmark marginal cost of fund-based lending rate (MCLR) across tenures, after the Reserve Bank of India (RBI) kept the repo rate unchanged at 6.50% for the ninth consecutive time in its bi-monthly monetary policy.

In a new round of loan rate hikes, three public sector banks have increased their MCLR by 5 basis points. While Bank of Baroda and Canara Bank have revised their benchmark lending rates on six-month and one-year tenures with effect from 12 August, UCO Bank has raised it from August 10. One bps is 0.01 percentage point.

For Canara Bank, the benchmark one-year tenor MCLR, used to price most consumer loans such as auto and personal, is set at 9% against the earlier rate of 8.95%. The three-year MCLR now is 9.40% and for the two-year tenor it is 9.30%, up by 5 bps.

Canara Bank's one-month, three-month and six-month tenor rates will now be 8.35-8.80%, and the MCLR on overnight tenor is 8.25%.

Kolkata-based UCO Bank raised the one-month MCLR to 8.35% from 8.30% and the one-year MCLR from 8.90% to 8.95%. It revised TBLR for one month from 6.85% to 6.7% and for 12 months from 7% to 6.9%. The lender reduced the Treasury bill benchmark linked rates by 5-15 basis points.

Mumbai-based Bank of Baroda revised MCLR for the three-month tenor to 8.5% from 8.45% and the six-month tenor to 8.75% from 8.7%. The MCLR for one-year loans will now be 8.95%, up from 8.9%. 

Last month, Bank of India hiked its MCLR for the one-year tenure by 5 bps with effect from 1 August, while the State Bank of India raised its lending rate by 5 to 10 bps across tenures.

In January, HDFC Bank and IDFC First Bank raised MCLR by an average of 5 bps as cost paid on deposits went higher.

MCLR is the minimum rate at which a bank lends to corporate loan customers. In determining the MCLR, banks take into account the cost of funds or deposits.

According to rating agency Crisil, the cost of funds for banks is expected to rise by 25-30 bps in FY25.