Tamilnad Mercantile Bank has implemented a 10 basis points increase in its Marginal Cost of Funds Based Lending Rate (MCLR) effective July 7, 2026. According to reports from The Hindu BusinessLine, the private sector bank has revised its MCLR across all tenors with the new rates taking effect from this date.
The bank's revised MCLR structure shows overnight and one-month rates at 7.70 per cent (up from the current 7.60 per cent), while three-month rates stand at 8.40 per cent (increased from 8.30 per cent). As reported by The Hindu BusinessLine, six-month rates are set at 8.95 per cent (up from 8.85 per cent) and one-year rates at 9.35 per cent (increased from 9.25 per cent).
The rate revision will affect various loan categories linked to the MCLR benchmark, according to The Hindu BusinessLine reports. Corporate loans, business loans (non-MSME), and loans against property are among the loan products that will be impacted by the new MCLR rates. These loans are directly linked to the bank's lending rate structure.
MCLR comprises several key components including marginal cost of funds, negative carry on account of the cash reserve ratio, operating costs, and tenor premium. As reported by The Hindu BusinessLine, this benchmark rate serves as the foundation for various lending products offered by the bank, making the revision significant for existing and potential borrowers across different loan categories.
Despite the MCLR revision, smaller private banks face challenges in mobilizing Foreign Currency Non-Resident (Bank) deposits under RBI's limited period swap window. Banks without overseas or GIFT City presence, including Tamilnad Mercantile Bank, may struggle to offer leverage support to NRI customers, as reported by The Hindu BusinessLine. This constraint limits their ability to compete effectively for FCNR (B) deposits, particularly as larger banks with international operations can provide better service to NRI customers seeking leverage facilities.
