Tamilnad Mercantile Bank (TMB) has announced a revision in its Marginal Cost of Funds Based Lending Rate (MCLR) and Repo Linked Lending Rate (RLLR), effective March 7, 2025. The bank has reduced the one-year MCLR to 9.60% from the previous 9.75%, while the RLLR has been revised down to 9.25% from 9.45%.
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The decision follows the bank’s ongoing adjustments to its lending rates, reflecting changes in market conditions and internal cost structures. The revised rates are expected to impact various loan products linked to the MCLR and RLLR benchmarks.
What is MCLR?
MCLR is the minimum interest rate at which a bank is willing to lend to its customers. It is calculated based on the marginal cost of funds, which includes factors like the cost of borrowing, operating costs, and the bank’s desired profit margin.
The MCLR ensures that banks’ lending rates are more transparent and reflect market conditions, making loans like home loans and personal loans more affordable when the rates are adjusted downward.
Also Read: HDFC Bank increases MCLR rate on this tenure
How does RLLR affect lending rates?
RLLR is a lending rate that is directly linked to the repo rate set by the Reserve Bank of India (RBI). When the RBI changes the repo rate, the RLLR of banks changes accordingly. This means that if the RBI increases or decreases the repo rate, banks adjust their lending rates tied to the RLLR, impacting the interest rates on loans such as home loans, car loans, and personal loans for customers.
The RLLR helps align lending rates with broader economic conditions, offering borrowers a transparent rate that reacts to changes in the market.
