Five major banks have revised their marginal cost of funds based lending rate (MCLR) in June 2026 following the Reserve Bank of India's decision to keep the key policy rate unchanged. According to reports from The Economic Times, internal reviews at respective banks amid liquidity and other cost-related challenges may have prompted these revisions. MCLR serves as the internal benchmark that banks use to price several floating-rate loans and represents the minimum rate of interest banks need to charge borrowers.
Indian Overseas Bank revised MCLR rates across all tenures effective June 15, 2026, with increases of 0.05% across one-month, one-year, and two-year rates, resulting in new rates of 8.25%, 8.8%, and 8.8% respectively. Bank of Maharashtra implemented a 0.1% increase effective June 17, 2026, raising rates to 8.8% for one-month tenure and 8.95% for six months and above. Bank of Baroda revised rates higher by 0.05% effective June 12, 2026, with the 1-year MCLR rate now at 8.75% compared to the earlier 8.7%. Canara Bank maintained rates steady for longer tenures while increasing shorter tenures by 0.05% effective June 12, 2026. HDFC Bank re-priced its MCLR rate higher with a 0.05-1% increase, fixing the 1-year MCLR rate at 8.4% effective June 8, 2026.
As reported by The Economic Times, the increase in MCLR will impact both existing borrowers with loans linked to the MCLR rate regime and new borrowers. Ravi Singh, Managing Director at Airmoney services, explained that borrowers are likely to see either a higher EMI or a longer repayment tenure depending on loan terms. For example, a home loan of ₹1 crore at an interest rate of 7.5% for 15 years with an EMI of around ₹92,700 would see the EMI increase to approximately ₹95,600 if the MCLR increase pushes the effective interest rate to 8%, representing an increase of nearly ₹2,900 per month assuming the tenure remains the same.
According to reports from The Economic Times, since October 1, 2019, the Reserve Bank of India made it mandatory for all banks to link new floating-rate loans to an external benchmark such as the RBI repo rate. The latest revision in MCLR will impact borrowers with loans linked to the MCLR rate regime, with the change in EMI or loan tenure expected to be seen at the next reset date for most affected borrowers.
