5 banks revised MCLR rates in June 2026; check how borrowers may be impacted

After the Reserve Bank of India (RBI) in its June policy review left the key policy rate unchanged, a host of banks revised the marginal cost of funds based lending rate (MCLR). Internal reviews at respective banks amid liquidity and other cost-related challenges may have prompted the revisions.

Before we head to how the MCLR rates have been revised by banks, let’s briefly understand MCLR and who will be impacted by the change.

MCLR is the internal benchmark that banks use to price several floating-rate loans. It is the minimum rate of interest that banks need to charge borrowers. Since October 1, 2019, the Reserve Bank of India (RBI) made it mandatory for all banks to link new floating-rate loans to an external benchmark such as the RBI repo rate.

The latest revision in MCLR will impact borrowers with loans linked to the MCLR rate regime. As most bankers have hiked the rate, the change in the EMI or loan tenure will be seen at the next reset date.

Indian Overseas Bank: With effect from June 15, 2026, the public sector lender revised MCLR rate across tenures, including one-month, one-year and two-year MCLR rate. The new rate has been revised higher by 0.05% and is 8.25%, 8.8% and 8.8%, respectively.

Bank of Maharashtra: The revision has been made with effect from June 17, 2026. The rate has been revised higher by 0.1% for tenure of six months to more than six months to 8.8% and 8.95%, respectively.

Bank of Baroda: Across tenures, the state-run lender with effect from June 12 revised rates higher by 0.05%. Now the 1-year MCLR rate is 8.75% as against the earlier 8.7%.

Canara Bank: The rate has been revised higher with effect from June 12, 2026. The effective hike has been for shorter tenures by 0.05%, while the rate for 1-year, 2-year and 3-year has been held steady.

HDFC Bank: Soon after the RBI policy review, HDFC Bank re-priced its MCLR rate higher. The 1-year MCLR rate after a hike by 0.05% is fixed at 8.4%.

Impact on borrowers explained

Ravi Singh, Managing Director at Airmoney services said, “The increase in MCLR will impact both existing borrowers (whose loans are linked to MCLR) and new borrowers. As lending rates go up, borrowers are likely to see either a higher EMI or a longer repayment tenure, depending on the loan terms.”

For example, if someone has a home loan of ₹1 crore at an interest rate of 7.5% for 15 years, the EMI is around ₹92,700. If the MCLR increase pushes the effective interest rate to 8% ( MCLR + spread charged by banks), the EMI would rise to about ₹95,600, which is an increase of nearly ₹2,900 per month, assuming the tenure remains the same.