Multiple banks. Different interest rates. Call it a "conflict of interest".
  • loading

    How MCLR Base rate affect on Loans

    We found 32 How MCLR Base rate affect on Loans

    Bank Name
    Interest Rate Range
    Processing Fee Range
    Loan Amount
    Tenure Range
    11.49% - 15.99% Fixed
    1% to 2.5%
    30L Max
    1-5 Years
    Response Time Within 30 minutes
    Rs.1000 Amazon voucher free Ad
    What you'll love
    Documents
    Perks
    Fees & Charges
    Good to Know
    Eligibility Criteria
    Customer Reviews
    10.99% - 14.49% Fixed
    0
    30L Max
    1-5 years
    Response Time Within 30 minutes
    Rs.1000 Amazon voucher free Ad
    What you'll love
    Documents
    Perks
    Think about
    Fees & Charges
    Good to Know
    Eligibility Criteria
    Customer Reviews
    12% - 18% Fixed
    Up to 1.5% One time fee
    15L Max
    1-5 years
    Response Time Within 30 minutes
    Rs.1000 Amazon voucher free Ad INSTANT DECISION
    What you'll love
    Documents
    Perks
    Think about
    Fees & Charges
    Good to Know
    Eligibility Criteria
    Customer Reviews
    11.99% - 19.50% Fixed
    0 One time fee
    20L Max
    1-6 Years
    Response Time Within 30 minutes
    Rs.1000 Amazon voucher free Paperless approval option available
    What you'll love
    Documents
    Perks
    Fees & Charges
    Good to Know
    Eligibility Criteria
    Customer Reviews
    13.99% - 16.99% Fixed
    1% - 2% One time fee
    20L Max
    1-5 years
    Response Time Within 30 minutes
    Rs.1000 Amazon voucher free Paperless Approval Option Available
    What you'll love
    Documents
    Perks
    Fees & Charges
    Good to Know
    Eligibility Criteria
    11.00% - 17.99% Fixed
    2.25% (min. ₹1149) One time fee
    20L Max
    1-5 Years
    Response Time Within 30 minutes
    Rs.1000 Amazon voucher free Paperless approval option available
    What you'll love
    Documents
    Perks
    Think about
    Fees & Charges
    Good to Know
    Eligibility Criteria
    Customer Reviews
    10.85% - 11.85% Floating
    0.5% One time fee
    50 K - 10 L
    1-5 Years
    Response Time Within 30 minutes
    Guarantor Required Paperless approval option available
    What you'll love
    Documents
    Perks
    Think about
    Fees & Charges
    Good to Know
    Eligibility Criteria
    10.99% - 19.8% Fixed
    Up to 2.5% One time fee
    25L Max
    1-5 years
    Response Time Within 30 minutes
    Rs.1000 Amazon voucher free Paperless approval option available
    What you'll love
    Documents
    Perks
    Think about
    Fees & Charges
    Good to Know
    Eligibility Criteria
    Customer Reviews
    11.99% - 19% Fixed
    Up to ₹3000 One time fee
    25L Max
    1-5 years
    Response Time Within 30 minutes
    Rs.1000 Amazon voucher free Paperless approval option available
    What you'll love
    Documents
    Perks
    Think about
    Fees & Charges
    Good to Know
    Eligibility Criteria
    Customer Reviews
    17.25% - 37% Fixed
    1.5% to 6.0% One time fee
    15L Max
    1-4 Years
    Response Time Within 30 minutes
    Rs.1000 Amazon voucher free Paperless approval option available
    What you'll love
    Documents
    Perks
    Think about
    Fees & Charges
    Good to Know
    Eligibility Criteria
    11.49% - 20.15% Fixed
    Up to 2%
    15L Max
    1-5 years
    Response Time Within 30 minutes
    Rs.1000 Amazon voucher free
    What you'll love
    Documents
    Perks
    Think about
    Fees & Charges
    Good to Know
    Eligibility Criteria
    Customer Reviews
    11.5% - 13.25% Fixed
    0 One time fee
    30L Max
    1-5 Years
    Response Time Within 30 minutes
    Rs.1000 Amazon voucher free
    What you'll love
    Documents
    Perks
    Fees & Charges
    Good to Know
    Eligibility Criteria

    How MCLR Base rate affect on Loans is Rated as "Great!" by 74151 Users

    Personal Loan BYTES FROM OUR KITCHEN

    New Marginal Cost of Funds based Lending Rate (MCLR) Base Rates

    There’s a new buzz of MCLR but what exactly is it? Will it affect your loan? Will it affect future loans? The Reserve Bank of India took the step to change the way interest rates function in the country. But we will have to wait and see if the new regime will have an effect on the banks.

    Why MCLR?

    As the need for bettering the lending rate system was rising, the Reserve Bank of India introduced a new method called Marginal Cost of Funds based Lending Rate (MCLR) in April 2016. This new regime is a modification of the old base rate system. MLCR calculations are done on the basis of the interest rate offered by a bank on deposits and the repo rate. The base rate will then be derived on the basis of the MCLR calculations. According to the new guidelines, commercial banks will have to prepare the new internal benchmark lending rate based on the marginal cost of funds.

    In the old base rate system, the banks took time to change their interest rate according to the changes in the repo rate. Though there were periodic rate changes from the RBI, banks were reluctant to change their own deposit rates and lending rates.

    Based on the MCLR, the bank will have to fix interest rates for different types of customers according to their risk factor. Five benchmark rates are required for different tenures which range from 1 day to 1 year. The banks are free to set rates for tenures exceeding 1 year. The MCLR will be revised on a monthly basis taking into consideration the repo rate and other rates related to borrowing. Banks cannot lend below the MCLR but there are a few exceptions. For loans against deposits and loans to employees of the respective bank, banks can lend below the MCLR.

    What is MCLR?

    When we breakdown Marginal Cost of Funds Lending Rate, it becomes simpler to understand. The term “marginal” in the economic sense means additional or could mean the change in the current state. So the MCLR will be based on the changes in the cost condition which we can refer to as the marginal cost conditions. There are different components that make up the marginal costs.

    • Marginal cost of funds which comprises of marginal cost of borrowings and return on net worth
    • Negative carry on account of cash repo rate which is the cost banks incur to keep reserves with RBI.
    • Operating costs incurred by the banks
    • Tenor premium which is the higher interest that can be charged for long term loans.

    Marginal costs are charged based on the following factors as per the RBI guidelines:

    • Interest rate offered on deposits including savings, term, and current and foreign currency deposits.
    • Return on net worth
    • Borrowings meaning the repo rate, short term interest rate, and the long term interest rate

    The Marginal Cost of Funds will be based on these components. 92% of the MCLR is determined by the marginal cost of funds, deposit rate and repo rate. The return on net worth will comprise of 8%.

    What kind of loans will be linked to the MCLR?

    All floating rate loans that are sanctioned from April 1st, 2016, will be based on the MCLR. For credit renewal as well, the MCLR will apply. For existing borrowers, there will be an option to switch over to the MCLR system. Floating rate loans include:

    The MCLR is relevant only to banks. So any loan with a floating interest rate sanctioned from a bank will be linked to the MCLR. Some banks have also linked their auto loans and educational loans.

    How does a MCLR-linked loan work?

    Under the MCLR scheme, loans will work differently from the base rate regime. Two terms you should familiarise yourself with is “Reset Clause” and “Spread”.

    Reset Clause - On the day your loan is sanctioned, the MCLR prevailing on that day will be applicable on your loan. There will be reset dates allotted to your loan, and the interest rate will change to the MCLR prevailing on the reset date. The periodicity for a reset is usually 1 year or lesser depending on the agreement with the bank.

    For example, your loan is sanctioned on April 1st with a reset period of 1 year. The prevailing MCLR on 1st April 2016 is 10% per annum. This will be your interest rate for 1 year. If the rate falls to 8% during the year, this will not affect your rates. Your loan will continue at the same 10% as it is valid for 1 full year. On 1st April 2017, the interest rate will change to the prevailing rate on that day.

    Spread - Now the loans linked to MCLR will come with a spread. Banks can spread their MCLR over 25 basis points. The spread, in simple terms, means the amount or margin that you have to pay over the MCLR. Banks are free to set the range of spread on different loans.

    For Example, if the MCLR is 11%. But the rate of interest offered by the bank is 11.25%. The difference is the spread imposed by the bank, i.e., 0.25%.

    What does MCLR mean for existing loan borrowers?

    Existing borrowers have the option to continue under the base rate regime or switch to MCLR. Once the switch is made, it cannot be reversed. To make the switch, the customer needs to request the bank to link the loan to MCLR instead of the Base Rate. You can request the bank to reduce the quantum of spread. There may be a one-time charge applicable for the conversion. Presently, MCLR-linked loans are cheaper than the base rate loans. So a switch could be a good idea. However, customers must keep in mind that if the RBI hikes the rates, this will result in a hike in the rate of interest. Take into consideration the cost of shifting the loan to MCLR and the benefit in interest rates. If the shift amounts to 25 basis points or more, and you have a longer tenure on your loan, then the shift is advisable. But making a shift for a difference of 10 basis points may not be beneficial.

    Effects of MCLR

    Regulation in Rate Changes - Under the old system of base rates, the RBI noticed the banks were prompt to increase interest rates on floating rate loans when the RBI increased rates. But on the other hand, when the RBI slashed rates, banks were slow to cut their rates. The aim of the MCLR system is to change this pattern and get banks to change their rates regularly according to the changes in cost conditions.

    Effect on spread - The RBI also noticed that banks would initially offer low interest rate loans at very low spreads. This would be appealing to the customer. But after a few months, the banks would increase the spread for no legitimate reason. Even if the base rate was not increased, the spread would be raised, therefore resulting in an unfair rise in interest rates for the customer. Under the MCLR, banks are required to set a spread chargeable to the customer at the time of sanctioning the loan. The spread cannot be increased unless the customer’s credit profile changes. Furthermore, banks have to reset the interest rates on loans at least once a year.

    Transparency - Overall, the MCLR brings in more transparency for the customer. The pricing of floating rate loans will be clearer.

    Effect on banks - The MCLR will affect the margins of banks. They will also have to publish their interest rates every month for at least 5 different tenures. They are also restricted in terms of the spread they can charge a customer during the loan term.

    Exemptions under MCLR

    • MCLR will be applicable to almost all loans except fixed rate home loans, car loans and personal loans.
    • Loans that fall under Government Schemes where the banks are directed to charge a certain rate of interest are also exempt from MCLR.
    • MCLR is applicable only to banks. So loans that are taken from finance companies and houses will not fall under this system. The Non-Banking Financial companies include LIC Housing Finance, Dewan Housing (DHFL), HDFC, Indiabulls etc.
     Loading your search... Loading your search...
  • How MCLR Base rate affect on Loans Reviews

    • HDFC Bank Personal Loan
      "Fast and Best Service in HDFC"
      0.5 5.0/5 "Blown Away!"
      I am an account holder of HDFC, hence my home branch have reached me and provided the best loan option. They sanctioned the personal loan with the interest rate around 14% and they processed within same days. Hence I have cancelled HDFC online loan request.
      Was this review helpful? 0
      , dindigul
      Reviewed on May 27, 2017
    • Kotak Personal Loan
      "Its Better"
      0.5 4.0/5 "Great!"
      After giving the loan request to Kotak Mahindra bank, they had called me and shared the loan process update. But due to the personal reason I had postponed the plan. Other banks are providing beneficial interest rate but Kotak charges high rate.
      Was this review helpful? 0
      , new delhi
      Reviewed on May 27, 2017
    • Bank Bazaar Customer Support
      "Excellent services"
      0.5 5.0/5 "Blown Away!"
      The services at Bankbazaar has been up to my satisfaction. It was a nice experience because the team was helpful in giving me the details and they also checked about my requirement as well. They were in constant touch and the website was good and user friendly.
      Was this review helpful? 0
      , faridabad
      Reviewed on May 27, 2017
    • IDBI Personal Loan
      "Good Service"
      0.5 5.0/5 "Blown Away!"
      IDBI is good in the rate of interest. I got the interest rate of 9.8% for the personal loan with the processing fee of 1% of the loan amount. Documentation process is very simple and it is surely a recommendable bank. Even they maintain good customer service.
      Was this review helpful? 0
      , bangalore
      Reviewed on May 27, 2017
    • Bank Bazaar Customer Support
      "Prompt service"
      0.5 5.0/5 "Blown Away!"
      I do not have any suggestions for bankbazaar as everything went good with them when I approached them for the loan process. Their website is easy to handle and it is informative. I got very good responsiveness and good customer service from bankbazaar.
      Was this review helpful? 0
      , bangalore
      Reviewed on May 27, 2017
    • Citibank Personal Loan
      "High Interest Rate"
      0.5 4.0/5 "Great!"
      Citi bank is on higher end in terms of interest rate. They quoted some high rate of interest for the personal loan. When I checked with other banks, I got lower interest rate than CITI bank so I closed my application with CITI. Customer service and everything is fine except the interest rate.
      Was this review helpful? 0
      , bangalore
      Reviewed on May 27, 2017
    • Kotak Personal Loan
      "Good overall"
      0.5 4.0/5 "Great!"
      Kotak Mahindra Bank has been good in the services for the personal loan. The team contacted me on time and informed me the details. The loan could not process due to the banking norms. I was offered a normal interest rate and processing charges.
      Was this review helpful? 0
      , faridabad
      Reviewed on May 27, 2017
    • Tata capital Personal Loan
      "Interest rate is high "
      0.5 2.5/5 "Just OK"
      My existing home loan was running with AXIS, I thought its better to take personal loan from same AXIS bank. Hence I have not taken personal loan from TATA Capital and their interest rate is too much high. Tata Capital charging around 13.99% but AXIS giving 11.99% of interest.
      Was this review helpful? 0
      , ahmedabad
      Reviewed on May 27, 2017
    • Bank Bazaar Customer Support
      "Overall good"
      0.5 4.0/5 "Great!"
      My overall experience with Bankbazaar was good. I was contacted on time and given the details.The website was good and informative. But when I click on the bank names to get more details is was taking me to the application page. Else good and no issues.
      Was this review helpful? 0
      , bangalore
      Reviewed on May 27, 2017
    • ICICI Bank Personal Loan
      "Prompt service"
      0.5 5.0/5 "Blown Away!"
      ICICI bank offered high interest rate for the personal loan which is 12.75%. Th services are very prompt and they are really good in processing the loan application. I did not have any issues with them in the entire process. All things went good with them.
      Was this review helpful? 0
      , pune
      Reviewed on May 27, 2017
    • Standard Chartered Bank Personal Loan
      "Good services"
      0.5 4.0/5 "Great!"
      Since I had to travel out of the country, I did not proceed ahead for the personal loan with Standard Chartered Bank. They did contact me a couple of time for the loan. The rate of interest was low but not the lowest, it was around 11.49% and the processing charges were normal.
      Was this review helpful? 0
      , bangalore
      Reviewed on May 27, 2017
    • Bank Bazaar Customer Support
      "Supportive Service"
      0.5 4.0/5 "Great!"
      Two years ago I availed the loan through bankbazaar. So again I approached bankbazaar for the personal loan this time. I got good response from them and their website is quite easy to handle. It would be fine if the mobile app is even more user friendly. Overall service is pretty good.
      Was this review helpful? 0
      , pune
      Reviewed on May 27, 2017
    • Capital First Personal Loan
      "Good Service"
      0.5 4.0/5 "Great!"
      When I applied for the personal loan with Capital First, they offered the loan but it was not up to my requirement also I got better offers from other banks so I just moved out from capital First. But their response and customer services are good with capital first. Interest rate and processing fee is good with Capital First.
      Was this review helpful? 0
      , pune
      Reviewed on May 27, 2017
    • Axis Bank Personal Loan
      "Good"
      0.5 4.0/5 "Great!"
      I have closed the personal loan with the Axis bank and the rate of interest was around 14.5% and the processing charges were okay with them. I would like to suggest that they can make lesser rate of interest for the customer, so that they can make the business. Customer service is fine one with them.
      Was this review helpful? 0
      , gurgaon
      Reviewed on May 27, 2017
    • HDFC Bank Personal Loan
      "Good"
      0.5 4.0/5 "Great!"
      I have made the balance transfer of my personal loan with the HDFC bank and the rate of interest was around 11.29%, which is really good. The loan amount got disbursed to my account within three to four days of time, also there were no processing charges with them till now.
      Was this review helpful? 0
      , gurgaon
      Reviewed on May 27, 2017
    • Kotak Personal Loan
      "Timely process has to be done"
      0.5 4.0/5 "Great!"
      I am not happy with Kotak Mahindra personal loan process, they took more than a month and they processed an EMI before sanctioning the loan. I took the amount of 3 lakhs with the tenure of 3 years and my EMI is 10,802, its running without any issues.
      Was this review helpful? 0
      , chennai
      Reviewed on May 27, 2017
    • Bank Bazaar Customer Support
      "Very good in services"
      0.5 5.0/5 "Blown Away!"
      The customer services are good at Bankbazaar and they know how to handle a customer. The portal is good and very much helpful. It helped me to identify the right bank by using the comparison tools on the portal. The follow up calls are also of great support to me.
      Was this review helpful? 0
      , raipur
      Reviewed on May 27, 2017
    • Bank Bazaar Customer Support
      "Easy to Navigate"
      0.5 4.0/5 "Great!"
      Bank Bazaar come to know through online but they are good in service, they are doing speedy service and they are analyzing the customer's profile and giving best service. The portal is also good to check multi information of banking products.
      Was this review helpful? 0
      , chennai
      Reviewed on May 27, 2017
    • ICICI Bank Personal Loan
      "Unhappy with the banking services"
      0.5 1.0/5 "Really Bad"
      I had applied for a personal loan with ICICI bank and it was not up to the mark. The customer support needs to be more professional and though I received a response, I am not happy with the overall services. I did not go to the extent to talk about the interest rate and charges.
      Was this review helpful? 0
      , raipur
      Reviewed on May 27, 2017
    • IndusInd Bank Personal Loan
      "They Should Bring New Ideas"
      0.5 1.0/5 "Really Bad"
      I have few other loans are running , hence when I gave loan request to Indusind, however they have rejected it. But I am a prompt payer, I could track my record and process the loan. Indusind not potential to get the customer inside as they dont provide praactive customer service.
      Was this review helpful? 0
      , chennai
      Reviewed on May 27, 2017
    Common Loader Icon
  • reTH65gcmBgCJ7k
    This Page is BLOCKED as it is using Iframes.