UCO Bank Hikes MCLR, Treasury Bill Linked Rate; EMIs To Get Costlier

Indian public sector lender, UCO Bank has hiked Marginal Cost of Fund-Based Lending Rate (MCLR) rates by 5 basis points across tenures with effect from September 9, 2023. Also, the lender has revised rates on Treasury Bill Linked Lending Rates (TBLR). This means that EMIs linked to MCLR and TBLR benchmarks will get costlier ahead. On Monday, UCO Bank shares however witnessed a sharp rally by over 3% and also neared its 52-week high.

In its regulatory filing, UCO Bank said, "We inform that the Bank's Asset Liability Management Committee (ALCO) has reviewed
the Benchmark rates and decided for revision in Marginal Cost of Fund-Based Lending Rate (MCLR) and Treasury Bill Linked Lending Rates (TBLR)."

UCO Bank MCLR rates:

From September 9, 2023, the 1-year MCLR is now at 8.70% from earlier 8.65%. While six-months and three-months MCLR is at 8.55% and 8.30% from earlier 8.50% and 8.25% respectively.

Further, one-month MCLR is at 8.15% from the previous 8.10%, and lastly, on overnight tenure, the benchmark rate is 7.95% from earlier 7.90%.

What is MCLR?

MCLR is the minimum interest rate for term loans below which banks are not permitted to lend to borrowers. When banks revise MCLR, the interest rates on loans linked with this benchmark are also changed. These loans can be home loans, auto loans, personal loans, and business loans among others. But, not every borrower will be impacted by this MCLR hike.

Effective from April 1, 2016, all floating rate rupee loans sanctioned and renewed were directed by RBI to be priced with reference to the Marginal Cost of Funds based Lending Rate (MCLR) which was introduced as the internal benchmark for banks.

However, the rules were changed in October 2019.

From October 1, 2019, RBI introduced external benchmark lending rates including linking lending rates with policy repo rates. And directed the scheduled commercial banks to transmit to external benchmarks since MCLR did not deliver effective transmission of monetary policy. However, existing loans and credit limits linked to the MCLR/Base rate/BPLR will continue till repayment or renewal, as the case may be.

Thereby, those borrowers whose loans are linked with MCLR will only see the change in the rate hikes.

UCO Bank TBLR rates:

With effect from September 9, 2023, the TBLR on 12 month tenure is 7%, while on six-month and three-months the benchmark rate is at 6.95% and 6.80% respectively.

UCO Bank's Other Benchmark Interest Rates:

However, the bank said that "The revised MCLR and TBLR is effective from September 9, 2023. Other Benchmark rates viz. Repo Linked rate, Base Rate and BPLR remain unchanged."

That means, the repo linked rate remains unchanged at 9.30%, while the base rate is at 9.60% and BPLR stays at 14.25%.

UCO Bank Share Price:

At the time of writing, UCO Bank shares traded at Rs 35.70 apiece, up by 1.8% on BSE. The stock has touched an intraday high of Rs 36.20 apiece, which was near its 52-week high of Rs 38.15 apiece.

Currently, its market cap is nearly Rs 42,683 crore.

Year-to-date, UCO Bank shares have gained by over 14% on BSE.