Indian Bank announces MCLR hike by 5 basis points
What's the story
The Indian Bank has declared a rise in its Marginal Cost of Funds-based Lending Rate (MCLR) by five basis points on most tenures. This is effective from today ie. June 3, 2024. However, this increase does not apply to the overnight and one-month tenures. Consequently, borrowers' equated monthly installments (EMIs) for loans linked to this rate will see an increase.
Rate review
ALCO reviews MCLR and TBLR rates
Loans linked to the MCLR undergo a reset period, after which borrowers' interest rates are adjusted. The bank's Asset Liability Management Committee (ALCO) has reviewed not only the MCLR, but also the Treasury Bills-Linked Lending Rates (TBLR) from June 3 until their next review. Factors like cost of funds, operating costs, and profit margin influence minimum interest rates. A marginal adjustment has been made in TBLR rates for tenures equal to or less than three months.
Shares surge
Indian Bank's stock rises
Following the announcement of the MCLR increase, Indian Bank's stock experienced a significant surge. The bank's shares were trading over 6% higher on the Bombay Stock Exchange (BSE) today at around 2:20pm. This rise in stock value indicates a positive market response to the bank's decision to adjust its lending rates.