Following the Reserve Bank of India’s (RBI) decision to raise the repo rate by 50 basis points (bps) to 5.9% on September 30; Several banks, including the country’s largest lender State Bank of India (SBI), have hiked lending rates. .
SBI raised its external benchmark-based lending rate (EBLR) by 50 bps to 8.55 percent and its repo rate-linked lending rate by the same margin to 8.15 percent, the bank’s website said. The changes will take effect from October 1.
Loan interest rates apply to home loans and consequently equal monthly installments (EMIs).
Meanwhile, private sector giant ICICI Bank has hiked its EBLR to 9.25 per cent (effective September 30). ICICI Bank also increased its marginal cost of funds based lending rate (MCLR) following RBI’s rate hike. The private sector bank’s MCLR has been revised to 7.85-8.1 per cent with effect from October 1.
As of October 1, 2019, all banks have undergone a regime transition that links interest rates to an external benchmark.
External benchmarks include Treasury rates or yields published by the central government. RBI has taken a step to better broadcast its interest rate decisions.
Private lender YES Bank has also raised its MCLR; It now has revised its rates at 8.2-9.65 per cent for overnight term with effect from October 1.
“The RBI repo rate with effect from October 1 is 5.4 percent. The Bank shall include components in accordance with its deployment framework. For existing loans linked to a six-month deposit rate certificate; The rate is 6.79 percent with effect from October 1, 2022,” YES Bank said on its website.
State-run Securities Bank of India has increased its MCLR. The overnight MCLR has been raised by 10 bps to 6.95 percent. The one-year MCLR has increased by 10 bps to 7.8 percent, while the three-year MCLR has been raised by 20 bps to 8 percent.
Private sector lending heavyweight HDFC has also raised interest rates on retail lending rates from October 1. HDFC hiked rates by 50 bps in line with the rate hike announced by the RBI. From the next reset date, the increased rates will reflect on monthly EMIs for borrowers.
As of September 9, bank loan growth was up 16.2 percent year over year — a nine-year high. Meanwhile, deposit growth lagged behind at 9.5 percent.