Canara Bank, Bank of Baroda increase lending rates: Why loan EMIs for these borrowers may rise after hikes

Bank of Baroda and Canara Bank have increased their Marginal Cost of Funds-based Lending Rates (MCLR) by up to 10 basis points (bps) on select tenures. A basis point is one-hundredth of a percentage point. The revised MCLR rates of both banks are effective from today (August 12, 2026).


Borrowers with MCLR-linked loans could see their interest rates rise following the latest rate revision by Bank of Baroda and Canara Bank. The decision came a week after the Reserve Bank of India (RBI) maintained the repo rate at 5.25% in its monetary policy committee (MPC) meeting on August 5, 2026.

So, what is MCLR?

MCLR is the minimum interest rate a financial institution needs to charge for a specific loan. It dictates the lower limit of the interest rate for a loan. This rate limit is set in stone for borrowers unless specified otherwise by the RBI. The RBI introduced MCLR in 2016.

Canara Bank lending rates

Canara Bank has increased MCLR on select tenures by 5 bps. After the hike, lending rates will range from 7.95% to 9.10% across tenures. The overnight MCLR remains unchanged at 7.95%. One-month MCLR has gone up by 5 bps from 8% to 8.05%. Similarly, the three-month MCLR has been raised from 8.25% to 8.30%, while the six-month MCLR has moved up from 8.60% to 8.65%. The one- year MCLR has also been increased by 5 basis points, from 8.75% to 8.80% while the two- year and three- year MCLRs were increased by 5 bps each to 9.05% and 9.10%, respectively.

No.	MCLR Tenor	Existing Rate (%)	Rate w.e.f. 12.08.2026 (%)
1	Overnight MCLR	7.95	7.95
2	One Month MCLR	8.00	8.05
3	Three Month MCLR	8.25	8.30
4	Six Month MCLR	8.60	8.65
5	One Year MCLR	8.75	8.80
6	Two Year MCLR	9.00	9.05
7	Three Year MCLR	9.05	9.10

Bank of Baroda lending rates

Bank of Baroda has increased MCLR on a select tenure by 10 bps. After the increase, lending rates will range from 7.85% to 8.75% across tenures. The overnight and one-month MCLRs are unchanged at 7.85% and 7.95% respectively. The three-month MCLR has increased by 10 bps from 8.20% to 8.30%. While the six-month and one-year MCLRs have been kept unchanged at 8.50% and 8.75% respectively.

MCLR Tenor	Existing MCLR (%)	MCLR (%) w.e.f. 12 August 2026
Overnight	7.85	7.85
One Month	7.95	7.95
Three Month	8.20	8.30
Six Month	8.50	8.50
One Year	8.75	8.75