Banks may hike MCLR by 150 bps in FY24 amid tight liquidity: Report

RBI has raised policy repo rate by 250 basis points in stages to 6.5% in February 2023

Commercial banks are likely to increase the marginal cost of funds based lending rate (MCLR) by 100-150 basis points (bp) in the next financial year (FY24) amid a rise in the cost of money and tight liquidity. The transmission of monetary policy in the banking system could intensify in FY24, according to India Ratings and Research (Ind-Ra).

Responding to the repo rate rising since May 2022, banks have raised median MCLR (of one-year duration) by 120 basis points between May 2022-February 2023, Reserve Bank of India (RBI) data showed. The RBI has hiked policy repo rate by 250 basis points