Neutral impactEconomy
MCLR rises above year-ago level for first time in 14 months
Economic Times 2 hrs ago·7 Sept 2026, 2:52 am
The weighted average cost of funds for banks, known as Marginal Cost of Funds-Based Lending Rate (MCLR), has risen for the first time in 14 months. This increase, driven by higher deposit costs, means banks are now charging higher interest rates on new loans compared to a year ago.
For investors, this shift signals a potential tightening of credit conditions. Higher loan rates could dampen consumer spending and business investment, which may weigh on the broader economy. It also highlights that banks are passing on rising funding costs to borrowers despite the central bank keeping the repo rate steady.
Investors should watch the upcoming quarterly earnings of major banks to see if loan growth slows. Additionally, monitoring the repo rate decision in the next policy meeting will be crucial to gauge the future direction of interest rates.
Excerpt from Economic Times
Published On Sep 7, 2026 at 08:22 AM IST The one-year median marginal cost of funds-based lending rate ( MCLR ) of scheduled commercial banks moved above its year-ago level in August for the first time in 14 months, despite the repo rate remaining unchanged, pointing to some persistence in funding-cost pressures. The…Read the original at Economic Times
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