Chennai: Tamil Nadu-based private sector lender Karur Vysya Bank (KVB) has announced an increase in its Marginal Cost of Funds Based Lending Rate (MCLR) for select loan tenures. The revised lending rates will come into effect from July 22, 2026, according to a regulatory filing made by the bank.
The revision follows the bank’s earlier increase in its MCLR, base rate and Benchmark Prime Lending Rate (BPLR) in June. The latest changes are expected to impact borrowers whose loans are linked to the MCLR benchmark.
Revised MCLR rates
Following the latest revision, Karur Vysya Bank’s MCLR now ranges between 8.75 per cent and 9.35 per cent, depending on the tenure.
The bank stated in its filing:
“Marginal Cost of Funds Based Lending Rates (MCLR) of the Bank would be revised with effect from 22nd July 2026.”
The revised rates are as follows:
| Tenure | Previous Rate | Revised Rate |
|---|---|---|
| Overnight | 8.75% | 8.85% |
| One month | 8.65% | 8.75% |
| Three months | 8.95% | 8.95% (unchanged) |
| Six months | 9.10% | 9.15% |
| One year | 9.25% | 9.35% |
Base rate and BPLR unchanged
Apart from revising the MCLR, the bank said its other benchmark lending rates remain unchanged.
- Base Rate: 11.00%
- Benchmark Prime Lending Rate (BPLR): 16.00%
These benchmark rates are used for specific categories of loans and legacy lending arrangements.
What is MCLR?
The Marginal Cost of Funds Based Lending Rate (MCLR) is the minimum interest rate below which banks are generally not permitted to lend, except in certain cases permitted by the Reserve Bank of India (RBI).
Introduced by the RBI in 2016, the MCLR framework ensures that changes in banks’ funding costs are transmitted more effectively to borrowers. Banks review and revise MCLR periodically based on factors such as the cost of funds, operating expenses and liquidity conditions.
Borrowers whose loans are linked to the MCLR benchmark may see changes in their Equated Monthly Instalments (EMIs) or loan interest rates when their lending rate is reset, depending on the terms of their loan agreement.
Impact on borrowers
The increase in MCLR is likely to raise borrowing costs for customers whose home loans, vehicle loans, business loans or other credit facilities are linked to the revised benchmark rates.
However, the actual impact on borrowers will depend on the reset period specified in their loan agreements. Customers whose loans are linked to external benchmark lending rates, such as the RBI’s repo rate, will not be directly affected by this MCLR revision.
The latest revision reflects the bank’s periodic review of lending rates and comes amid evolving interest rate conditions in the banking sector.