Canara Bank & Bank Of Baroda Hike Lending Rates, Will Your Loan EMI Increase Now?

Mumbai: Canara Bank and Bank of Baroda have raised their Marginal Cost of Funds Based Lending Rates (MCLR) on select tenures, potentially making loans costlier for some borrowers.

The revised rates took effect on August 12, 2026. The hikes come just a week after the Reserve Bank of India kept the repo rate unchanged at 5.25 percent at its August 5 monetary policy meeting.

Who Is Affected?

The revision mainly affects borrowers whose home, vehicle, personal or other loans are linked to MCLR. Their interest rates may rise on the next reset date, depending on the loan agreement and applicable tenure.

A higher lending rate could increase the monthly EMI. In some cases, banks may keep the EMI unchanged but extend the repayment period. Loans linked to external benchmarks, such as the repo rate, will not be directly affected by these MCLR changes.

Canara Bank Hike

Canara Bank has increased its MCLR by five basis points across most tenures. Its overnight rate remains unchanged at 7.95 percent.

The one-month rate has risen to 8.05 percent, while the three-month rate is now 8.30 percent. The six-month and one-year rates have increased to 8.65 percent and 8.80 percent, respectively.

The two-year MCLR is now 9.05 percent, while the three-year rate has climbed to 9.10 percent. Thus, Canara Bank’s MCLR now ranges between 7.95 percent and 9.10 percent.

BoB Changes

Bank of Baroda has raised only its three-month MCLR by 10 basis points, from 8.20 percent to 8.30 percent.

Its overnight rate remains at 7.85 percent, while the one-month rate stays at 7.95 percent. The six-month and one-year rates are also unchanged at 8.50 percent and 8.75 percent, respectively.

MCLR is the minimum benchmark rate below which banks generally cannot lend. The RBI introduced it in 2016. Borrowers should check their benchmark, spread and reset date to understand the actual impact on repayments before assuming their EMI will rise immediately or automatically.