If you’re planning to take a loan or already have one with Canara Bank, it’s important to understand how MCLR (Marginal Cost of Funds Based Lending Rate) affects your borrowing cost. As of June 12, 2025, Canara Bank has updated its MCLR rates across all tenors. These rates directly influence home loans, personal loans, and other retail loans if they’re linked to MCLR.
This article provides complete details on Canara Bank’s revised MCLR rates, their impact on borrowers, differences between MCLR and RLLR, how to switch your loan, and frequently asked questions.
What is MCLR?
MCLR (Marginal Cost of Funds Based Lending Rate) is the minimum interest rate a bank can offer on loans (except in special cases). Introduced by the Reserve Bank of India (RBI) in April 2016, MCLR replaced the earlier base rate system to improve transparency and ensure faster transmission of policy rate changes to borrowers.
Each bank sets different MCLR rates for different loan tenors, typically from overnight to three years. Loans are sanctioned based on the applicable MCLR at the time of sanction or reset, plus a margin or spread depending on the product and the borrower’s profile.
Latest Canara Bank MCLR Rates – Effective from June 12, 2025
Here’s the updated MCLR rate chart released by Canara Bank:
| Tenure | MCLR (%) |
|---|---|
| Overnight | 8.00% |
| 1 Month | 8.05% |
| 3 Months | 8.25% |
| 6 Months | 8.60% |
| 1 Year | 8.80% |
| 2 Years | 8.95% |
| 3 Years | 9.00% |
👉 These revised rates are applicable for new loans and existing loans with reset clauses from June 12, 2025 onwards.
How This Affects You as a Borrower
If your loan is linked to MCLR, the change in these rates could directly affect your EMIs (Equated Monthly Installments). Here’s how:
- For new borrowers: Your loan interest rate will be based on the latest MCLR plus a spread (depending on the type of loan and credit profile).
- For existing borrowers: The new MCLR will apply from your next loan reset date (usually after 6 or 12 months, depending on your loan terms).
💡 Tip: Check your loan agreement to find out when your next interest reset date is scheduled.
MCLR vs RLLR: Which is Better?
Canara Bank also offers loans linked to the Repo Linked Lending Rate (RLLR), which changes with RBI’s repo rate.
| Feature | MCLR Loan | RLLR Loan |
|---|---|---|
| Basis of rate | Bank’s internal cost formula | RBI repo rate + spread |
| Transmission | Slower | Faster |
| Transparency | Moderate | High |
| EMI changes | On reset dates | Usually within 3 months |
If you prefer quicker policy rate transmission, RLLR-based loans may benefit you more in a falling interest rate scenario.
Should You Switch from MCLR to RLLR?
Switching to RLLR may make sense if:
- You have a long-term loan like a home loan.
- Interest rates are falling.
- Your MCLR-linked loan is resetting at higher intervals.
You can request Canara Bank to switch your loan from MCLR to RLLR. However, some conversion charges may apply.
Example: EMI Impact of MCLR Change
Let’s say you have a ₹20 lakh home loan for 20 years.
- Old MCLR (before June): 9.00%
- New MCLR (1-year): 8.80%
- Interest Spread: 0.25%
- Effective Rate: 9.05% → 9.05%
If your new reset is based on 8.80% MCLR, your EMI could reduce slightly, depending on the spread.
When is the Next MCLR Revision?
Canara Bank typically revises MCLR rates monthly, usually around the 12th of every month. Borrowers should keep track of these changes, especially before loan renewals, balance transfers, or new loan applications.
Contact Canara Bank
To check your loan type or request a switch:
- Visit the nearest Canara Bank branch
- Call Canara Bank Customer Care
- Log in to your net banking account
Final Thoughts
Canara Bank’s revised MCLR rates signal better affordability for new and existing borrowers. However, to benefit from lower rates, understanding your loan type—MCLR or RLLR—is essential. Don’t hesitate to contact your branch and explore switching options if you want to optimize your EMI outflow.
Frequently Asked Questions (FAQs)
The current 1-year MCLR rate of Canara Bank is 8.80% as of June 12, 2025.
Loans such as home loans, car loans, and personal loans that are linked to MCLR will be affected by the revised rates.
Yes, Canara Bank allows borrowers to convert their MCLR-linked loans to RLLR-based loans, usually with a nominal processing fee.
Canara Bank reviews and revises its MCLR rates on a monthly basis, usually around the 12th of each month.
You can check your loan documents or contact your Canara Bank branch to confirm whether your loan is MCLR-linked or RLLR-linked.
Not immediately. Your new EMI will reflect the change after your loan’s next reset date, which is usually 6 or 12 months from the last reset.
RLLR offers faster rate transmission and more transparency, while MCLR provides relatively stable interest rates. The better option depends on your financial goals and market trends.
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