Getty ImagesICICI Bank has revised its marginal cost-based lending rates (MCLR) for the month of June 2023 . The interest rate on a variety of loans, including home loans, are determined using the MCLR.
MCLR effective June 1, 2023.
Source: Bank website
RBI Policy Repo Rate and ICICI Bank External Benchmark Lending Rate
According to the ICICI Bank website, “RBI Policy Repo Rate effective February 8, 2023 is 6.50%. "ICICI Bank External Benchmark Lending Rate" (I-EBLR) is referenced to RBI Policy Repo Rate with a mark-up over Repo Rate. I-EBLR is 9.25% p.a.p.m. effective September 30, 2022.”
As there has been a steady increase in rates, home loan borrowers under the MCLR regime look to be better off continuing with the regime because they will pay lower EMIs for a longer period of time. It will take time for their loan rates to grow to levels comparable to the increased repo rate. They can plan to transition to EBLR whenever the interest rate cycle peaks or rates begin to fall.
On April 1, 2016, the RBI replaced the base rate system for setting interest rates with the MCLR system. Borrowers who received loans before April 1, 2016, are still subject to the previous base rate and benchmark prime lending rate (BPLR) system, although they can choose to switch to the MCLR rate if they believe it will benefit them.
Is it mandatory to link my loans to MCLR?
The answer is 'Yes,' if you have taken an Auto Loan or Travel Loan. No, if you have taken a Home Loan or Business Loan, as per the ICICI Bank website.
Effective Oct 01, 2019, the RBI introduced the external benchmarking system to replace the MCLR for Home Loans, Business Loans, and working capital loans, etc. This new lending rate system is only applicable for loans with floating interest rates and is not applicable for fixed interest loans. Also, the external benchmarking system will only be implemented in banks.
ICICI Bank MCLR rates
ICICI Bank has reduced one-month MCLR from 8.50% to 8.35% and it cut three-month MCLR by 15 basis points (bps) from 8.55% to 8.40%. The bank has hiked MCLR on six-month and one year tenures by 5 bps to 8.75% and 8.85% respectively.MCLR effective June 1, 2023.
| Tenures | I-MCLR |
| Overnight | 8.35% |
| One Months | 8.35% |
| Three Months | 8.40% |
| Six Months | 8.75% |
| One Year | 8.85% |
RBI Policy Repo Rate and ICICI Bank External Benchmark Lending Rate
According to the ICICI Bank website, “RBI Policy Repo Rate effective February 8, 2023 is 6.50%. "ICICI Bank External Benchmark Lending Rate" (I-EBLR) is referenced to RBI Policy Repo Rate with a mark-up over Repo Rate. I-EBLR is 9.25% p.a.p.m. effective September 30, 2022.”
As there has been a steady increase in rates, home loan borrowers under the MCLR regime look to be better off continuing with the regime because they will pay lower EMIs for a longer period of time. It will take time for their loan rates to grow to levels comparable to the increased repo rate. They can plan to transition to EBLR whenever the interest rate cycle peaks or rates begin to fall.
On April 1, 2016, the RBI replaced the base rate system for setting interest rates with the MCLR system. Borrowers who received loans before April 1, 2016, are still subject to the previous base rate and benchmark prime lending rate (BPLR) system, although they can choose to switch to the MCLR rate if they believe it will benefit them.
Is it mandatory to link my loans to MCLR?
The answer is 'Yes,' if you have taken an Auto Loan or Travel Loan. No, if you have taken a Home Loan or Business Loan, as per the ICICI Bank website.
Effective Oct 01, 2019, the RBI introduced the external benchmarking system to replace the MCLR for Home Loans, Business Loans, and working capital loans, etc. This new lending rate system is only applicable for loans with floating interest rates and is not applicable for fixed interest loans. Also, the external benchmarking system will only be implemented in banks.
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