IOB hikes benchmark lending rate by 0.05%

New Delhi: State-run Indian Overseas Bank (IOB) Friday raised its benchmark lending rate by 5 basis points, a move that will make all its loans costlier.

The bank has decided to increase the marginal cost of funds based lending rate (MCLR) by 0.05 percent across tenors, effective November 10, IOB said in a statement.

MCLR for a one-year tenor will rise to 8.75 percent from 8.7 percent. Most of its retail loans are benchmarked against one-year MCLR.

The rate for a two-year tenor has been fixed at 8.85 percent as against the existing 8.8 percent, while it is 8.95 percent for a three-year period.

The MCLR mechanism was introduced in the banking system in April 2016 as an alternative to base rate, below which banks cannot lend, for new borrowers.

The MCLR is calculated on the marginal cost of borrowing and return on net worth for banks.