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Allahabad Bank and Punjab National Bank have raised their marginal cost of funds-based lending rate (MCLR) by up to 10 basis points. While Kolkata-headquartered Allahabad Bank has decided on an across-the-board 10 basis points increase in MCLR, Delhi-headquartered PNB has upped the MCLR by 5-10 basis points (10 basis points on tenors up to six months and 5 basis points on one-year and above tenor) with effect from July 1, 2018. One basis point equals one-hundredth of a percentage point.
Following the hike, Allahabad Bank's benchmark one-year MCLR is now at 8.45 per cent (8.35 per cent earlier). PNB's one-year MCLR is also at 8.45 per cent (8.40 per cent).
All rupee loans sanctioned and credit limits renewed with effect from April 1, 2016 are priced with reference to the MCLR, which is be the internal benchmark for such purposes. Banks review and publish their MCLR on different maturities every month on a pre-announced date.
The increase in MCLR comes in the backdrop of bank credit showing a healthy pick-up, even as deposit accretion has slowed. According to RBI data, bank credit grew 12.7 per cent year-on-year as on June 8, 2018, against 5.7 per cent a year ago. Deposits grew at a slower pace of 8.4 per cent against 10.6 per cent a year ago.
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