Bank of Baroda Raises Marginal Cost of Funds-Based Lending Rates by Up to 20 Basis Points

State-owned Bank of Baroda (BoB) has announced a revision to its marginal cost of funds-based lending rate (MCLR), raising rates by 5 to 20 basis points (bps) across various tenors. The revised lending rates come into effect from November 12.

According to the bank's notification, the most significant upward revisions of 20 bps apply to the three-month and six-month tenors. Following the revision, the three-month MCLR has moved from 8.30 percent to 8.50 percent, while the six-month MCLR has increased from 8.50 percent to 8.70 percent.

Meanwhile, the one-month MCLR has been raised by 5 bps, moving from 7.95 percent to 8.00 percent. The widely referenced one-year MCLR, which typically serves as the benchmark for many consumer loans, has been increased by 10 bps from 8.75 percent to 8.85 percent.

Short-term lending rates for certain maturities remain steady. Specifically, the overnight MCLR is unchanged, staying at 7.85 percent.

Changes in the MCLR directly impact the interest rates on various loans linked to these benchmarks, affecting both new and existing borrowers depending on their loan structure and reset dates.

"An upward revision in the marginal cost of funds-based lending rate by major public sector lenders like Bank of Baroda signals tightening credit costs in the banking system. For businesses, especially early-stage enterprises and growing startups that rely on debt financing or working capital loans tied to these benchmarks, this translates directly to higher servicing costs. Founders and financial planners must account for rising interest rate cycles when projecting their cash flows and capital requirements over the medium term." — Dr. Shishir Gupta, Founder & CEO, StartupLanes