Canara Bank, Karur Vysya raise lending rates ahead of RBI's MPC review

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Canara Bank and Karur Vysya Bank on Monday said they have revised their lending rates leading to an increase in EMIs linked to the respective benchmarks.

State-owned Canara Bank has raised the marginal cost of funds based lending rate (MCLR) by 0.05 per cent of 5 basis points to 7.40 per cent for one year tenure.

The bank has also raised the MCLR rate for 6 months tenure to 7.35 per cent from 7.30 per cent.

The new rates are effective from June 7, Canara Bank said in a regulatory filing.

Most of the loans are linked to one year tenure.

Meanwhile, private sector lender Karur Vysya Bank in a separate filing said that it has revised the Benchmark Prime Lending Rate (BPLR) by 40 basis points to 13.75 per cent and the base rate by similar percentage points to 8.75 per cent.

These are the old benchmarks for lending before the MCLR regime.

Currently, banks follow external benchmarks or repo linked lending rates to disburse loans.

The rate hike comes days ahead of the RBI monetary policy review. The Monetary Policy Committee (MPC) headed by the RBI Governor expected to raise rates on Wednesday to tame inflation, which have been above the comfort level for the past four months.