Canara Bank Cuts MCLR by Up to 20 bps Across All Tenors, Effective June 12
By Shishta Dutta | Updated at: Jun 12, 2025 02:35 PM IST
Canara Bank (NSE: CANBK, BSE: 532483) has announced a downward revision in its Marginal Cost of Funds Based Lending Rate (MCLR) across all loan tenors, effective June 12, 2025, as per its regulatory filing under Regulation 30 of SEBI (LODR) Regulations, 2015.
The rate cut ranges from 15 basis points for overnight MCLR to 20 basis points for one-year loans, a move expected to make retail and corporate loans more affordable. This is the second such reduction this calendar year amid expectations of easing interest rate cycles.
Revised MCLR Rates
| Tenor | Previous Rate (%) | Revised Rate (%) (w.e.f. 12.06.2025) |
|---|---|---|
| Overnight | 8.20 | 8.00 |
| One Month | 8.25 | 8.05 |
| Three Month | 8.45 | 8.25 |
| Six Month | 8.80 | 8.60 |
| One Year | 9.00 | 8.80 |
| Two Year | 9.15 | 8.95 |
| Three Year | 9.20 | 9.00 |
How Will This Affect Borrowers?
1. Existing Borrowers (MCLR-Linked Loans):
Customers with floating-rate loans linked to MCLR, including home loans, auto loans, and personal loans, will see a reduction in their EMIs during their next reset cycle. For example, a home loan borrower linked to the one-year MCLR will now pay 8.80% instead of 9.00%, resulting in lower monthly installments.
2. New Loan Applicants:
For new borrowers, the revised MCLR will result in immediately lower interest rates, making new loans more affordable. This is likely to spur demand for home, vehicle, and business loans.
3. MSMEs and Corporates:
Short-term working capital and business term loans are expected to become more appealing, which in turn may lead to some credit growth in the SME and corporate segments as the cost of borrowing falls.
4. Fixed Rate Borrowers:
Borrowers with fixed-rate loans won’t see any immediate benefit from the MCLR cut. However, they might still have options like refinancing or switching to a floating-rate loan, if the bank allows it to take advantage of the lower rates.
How Does the MCLR Impact the Loan Interest Rate?
MCLR, or Marginal Cost of Funds-based Lending Rate, is the benchmark that Indian banks use to set interest rates on loans. In simple terms, it helps determine how much interest you’ll pay when you borrow from a bank.
Strategic and Regulatory Context
Canara Bank’s decision to lower its MCLR appears to be a smart, forward-looking move to stay competitive as interest rates begin to ease. It could also be a sign that the bank expects further cuts in the RBI’s repo rate. The update was shared through a regulatory filing under Regulation 30 of SEBI (LODR) Regulations, 2015, as required under SEBI’s rules to keep investors informed about significant developments.
Canara Bank Stock Performance
Canara Bank’s stock has had a mixed run. While it’s down 4.52% compared to this time last year, it has bounced back with a 16% gain so far in 2025 and climbed 16.24% in the past month.
About Canara Bank
Canara Bank is a prominent public sector lender headquartered in Bengaluru, India. Listed on both NSE and BSE, the bank offers a full spectrum of financial services including retail banking, corporate credit, insurance, and treasury services, with a pan-India network and overseas presence.
REF: https://nsearchives.nseindia.com/corporate/CANBK_11062025190036_pdf.pdf
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