New Delhi — Two major public sector lenders, Bank of India (BOI) and Punjab National Bank (PNB), have announced their latest lending rate revisions effective June 1, 2026, reflecting differing approaches to managing funding costs and lending benchmarks.
While Bank of India has increased select Marginal Cost of Funds-Based Lending Rates (MCLR) across short- and medium-term tenors, Punjab National Bank has opted to maintain all key lending rates, including its MCLR, Repo Linked Lending Rate (RLLR), and Base Rate, at existing levels.
The decisions were disclosed through regulatory filings submitted to stock exchanges under applicable SEBI Listing Regulations.
Bank of India Raises Short-Term MCLR Rates
Bank of India announced a modest upward revision in its MCLR structure, effective June 1, while keeping its Repo-Based Lending Rate (RBLR) unchanged.
Revised Bank of India MCLR Rates
Tenor New Rate Previous Rate Overnight 7.80% 7.70% 1 Month 8.10% 8.05% 3 Months 8.25% 8.20% 6 Months 8.65% 8.60% 1 Year 8.75% 8.75% 3 Years 8.90% 8.90%
The revision represents an increase of 5 to 10 basis points for shorter tenors, while the one-year and three-year MCLR rates remain unchanged.
The bank has also revised its Fixed Rate Spread (FRS) structure as follows:
- 1 Year: 8.75% + Credit Risk Premium (CRP)
- 2 Years: 9.25% + CRP
- 3 Years: 9.50% + CRP
- 5 Years: 9.85% + CRP
- Above 5 Years: 8.75% + Tenor Premium + CRP
PNB Maintains Status Quo on Lending Rates
In contrast, Punjab National Bank announced no changes to its benchmark lending rates, providing stability for borrowers linked to its existing loan benchmarks.
PNB MCLR Rates Effective June 1, 2026
Tenor Rate Overnight 7.95% 1 Month 8.20% 3 Months 8.40% 6 Months 8.60% 1 Year 8.75% 3 Years 9.05%
The bank further confirmed that:
- Repo Linked Lending Rate (RLLR): 8.10% (including BSP of 0.10%)
- Base Rate: 9.50%
Both rates remain unchanged from previous levels.
Impact on Borrowers
The increase in Bank of India’s short-term MCLR rates could result in a marginal rise in EMIs for borrowers whose loans are linked to MCLR benchmarks, particularly those with older retail and corporate loan products.
Meanwhile, customers of Punjab National Bank with loans linked to MCLR, RLLR, or the Base Rate will not see any immediate change in borrowing costs.
Banking Sector Outlook
The differing decisions by the two lenders underscore varying assessments of funding costs and liquidity conditions within the banking sector. While Bank of India has opted for a measured rate increase to align with funding cost dynamics, Punjab National Bank has chosen to maintain stability in its lending framework.
Industry observers will closely watch whether other major banks adopt similar rate revisions in the coming months as the sector responds to evolving market and monetary conditions.
Key Highlights
- Bank of India increased Overnight, One-Month, Three-Month, and Six-Month MCLR rates effective June 1, 2026.
- One-Year and Three-Year MCLR rates at Bank of India remain unchanged.
- Punjab National Bank maintained all benchmark lending rates without revision.
- PNB’s RLLR remains at 8.10%.
- PNB’s Base Rate remains unchanged at 9.50%.
- Borrowers with MCLR-linked loans may experience a modest increase in borrowing costs due to BOI’s rate adjustments.
