Canara Bank Raises Long-Term Lending Rates: EMIs on Some Loans May Increase

Borrowers May Face Higher EMIs After Canara Bank Revises MCLR Rates

Borrowers planning to take loans may soon feel the impact on their monthly installments as Canara Bank has increased its lending rates for certain long-term tenures. The public sector lender has revised its Marginal Cost of Funds-based Lending Rate (MCLR) for select tenures, a move that could lead to higher EMIs for customers with loans linked to this benchmark.

The revised rates came into effect on March 12, 2026

. While several short-term lending rates remain unchanged, the bank has increased its rates for longer tenures such as two-year and three-year MCLR.

Financial experts say that any rise in MCLR generally affects borrowers whose loans — including home loans, personal loans, and other retail loans — are linked to this benchmark rate.

New MCLR Rates Announced by Canara Bank

Canara Bank has kept most short-term MCLR rates unchanged. However, the lender has increased rates for longer tenures, which may influence loan costs for some customers.

Here are the latest MCLR rates applicable from March 12, 2026:

Tenor Previous Rate (%) New Rate (%)

Overnight MCLR	7.85	7.85
1 Month MCLR	7.90	7.90
3 Month MCLR	8.15	8.15
6 Month MCLR	8.50	8.50
1 Year MCLR	8.70	8.70
2 Year MCLR	8.85	8.95
3 Year MCLR	8.90	9.00

The increase of 10 basis points in the two-year and three-year MCLR means that borrowers whose loans are tied to these tenures could see a rise in their EMIs once the revised rates take effect in their loan reset cycle.

What the Rate Change Means for Borrowers

The MCLR system is used by banks to determine the minimum lending rate for different types of loans. When a bank increases its MCLR, borrowing costs typically rise for customers whose loans are linked to that benchmark.

For example, home loans and certain other retail loans often use the one-year MCLR as their benchmark rate. Since Canara Bank has kept the one-year MCLR unchanged at 8.70%, many borrowers may not see an immediate impact.

However, customers whose loans are tied to two-year or three-year MCLR tenures could face higher EMIs depending on their loan agreement and reset period.

Loan reset periods vary depending on the bank’s terms and the borrower’s loan contract. In many cases, the new rate applies when the loan’s reset cycle occurs.

Bank of Baroda Keeps Rates Unchanged

While Canara Bank has revised some of its lending rates, Bank of Baroda has decided to keep its MCLR rates unchanged.

The bank’s current MCLR structure remains as follows:

Tenor MCLR Rate (%)

Overnight	7.80
1 Month	7.90
3 Months	8.15
6 Months	8.45
1 Year	8.70

The one-year MCLR, which serves as a key benchmark for many retail loans, continues to remain steady at 8.70%.

IDBI Bank Releases Latest MCLR Rates

Meanwhile, IDBI Bank has also announced its latest MCLR rates across various tenures.

Tenor MCLR Rate (%)

Overnight	7.90
1 Month	8.05
3 Months	8.40
6 Months	8.60
1 Year	8.65
2 Years	9.25
3 Years	9.65

Financial analysts say that increasing MCLR rates, especially for longer tenures, signals a tightening lending environment where borrowing costs could gradually rise.

Why MCLR Changes Matter

Changes in MCLR are closely watched by borrowers because they directly influence loan interest rates. Even a small increase of 10 basis points (0.10%) can raise the total repayment amount over the life of a loan.

For example, on a large home loan, even a minor increase in the interest rate can translate into a noticeable increase in the monthly EMI or the total interest paid over time.

Experts advise borrowers to keep track of rate revisions and understand whether their loan is linked to MCLR, repo rate, or another benchmark, as the impact on EMIs may differ.