Summary of this article
The Canara Bank revised MCLR, effective March 12, 2026.
MCLR for two-year and three-year tenures increased by 10 basis points (0.10 per cent).
Loans linked with these benchmark rates and tenure will become costly for existing borrowers.
The Canara Bank revised its marginal cost of lending rate (MCLR) on March 12, 2026, keeping the one-year and shorter-tenure MCLR unchanged at 8.70 per cent, but revising the longer tenure rates upward. MCLR is the minimum rate under which banks are not allowed to offer loans. Banks use this rate for determining the final interest rate (MCLR + spread) for their different loans, such as home loans, personal loans, and other consumer loans.
Here are the revised MCLR effective March 12, 2026:
Tenure MCLR
Overnight 7.85 per cent
One Month 7.90 per cent
Three Months 8.15 per cent
Six Months 8.50 per cent
One-year 8.70 per cent
Two-year 8.95 per cent
Three-year 9.00 per cent
Source: Canara Bank
While the rates for the tenures up to one year have remained the same, the bank has revised the interest rate for two-year tenure from 8.85 per cent to 8.95 per cent and for three-year tenure from 8.90 per cent to 9.00 per cent.
This means that the loans linked to the longer tenure rates will result either in higher equated monthly instalments (EMIs) or longer tenure of the loan. However, it will affect only floating-rate loans.
MCLR And EBLR
MCLR came into effect on April 1, 2016, and remained applicable until the external benchmark lending rate (EBLR) launch on October 1, 2019. The loans taken from October 1, 2019, are linked with EBLR, as per the guidelines issued by the Reserve Bank of India (RBI).
Under MCLR, the interest rate is determined based on four components, including the marginal cost of funds, cash reserve ratio (CRR) requirements, operating costs, and the tenure premium.
Under EBLR, the rate is linked to the repo rate or Treasury bill rates. Sometimes, banks use the term Repo Linked Lending Rate (RLLR), which is also a type of EBLR.
So, the change in Canara Bank’s MCLR will affect only those existing borrowers who took the loans under the MCLR system and are linked with the two-or three-year MCLR. Typically, banks offer their borrowers the option to shift their loan from the MCLR to the EBLR benchmark if they wish to.
As many home loans and personal loans are linked to the MCLR, the higher rate will impact these borrowers as per the loan reset conditions and date mentioned in their loan agreements.
