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Bank of Maharashtra on Wednesday announced that it has raised its marginal cost of funds-based lending rate (MCLR) by 20-30 basis points with effect from December 14, 2022.

MCLR is the minimum interest rate at which a bank can offer a loan to a customer. It also acts as an internal reference rate for a bank to calculate interest rates for various other types of loans that it offers. Any increase in MCLR directly impacts the cost of loans for customers, while also boosting the bank’s margins on loans.

Bank of Maharashtra on Wednesday said it has raised:

Overnight MCLR to 7.5 percent from the existing 7.3 percent

1-month MCLR to 7.7 percent from 7.5 percent

3-month MCLR to 7.9 percent from 7.6 percent

6-month MCLR to 8 percent from 7.7 percent

and 1-year MCLR to 8.2 percent from 7.9 percent

Following the announcement, shares of Bank of Maharashtra surged nearly 11 percent in intraday trade on Wednesday to hit a new 52-week high of Rs 36.20.

Bank of Maharashtra’s decision to raise lending rate comes after the monetary policy committee (MPC) of the Reserve Bank of India (RBI) at its meeting on 7 December increased the policy repo rate under the liquidity adjustment facility by 35 basis points to 6.25 percent with immediate effect.

The country's largest bank, the State Bank of India, on Tuesday announced a sharp hike in interest rates on domestic retail term deposits and domestic bulk term deposits (TDs) by 50-100 basis points across tenors.

Shares of Bank of Maharashtra ended 4.4 percent higher at Rs 34.10.