The benchmark lending interest rates at HDFC, Bank of Baroda, PNB, Union Bank, RBL, IndusInd Bank, and RBL Bank have increased.
Banks are raising their interest rates on loans and deposits even though the Reserve Bank of India (RBI) has been increasing the repo rate since May of this year to control inflation. The repo rate was increased by the RBI by 50 basis points to 5.9% on Friday as well. The benchmark lending interest rates have been increased by a number of lenders, including HDFC, Bank of Baroda, PNB, Union Bank, RBL, IndusInd Bank, and RBL Bank.
Mortgage lender HDFC increased its lending rate by 50 basis points on Friday, hours after the RBI increased the repo rate.
“HDFC increases its Retail Prime Lending Rate (RPLR) on Housing loans, on which its Adjustable Rate Home Loans (ARHL) are benchmarked, by 50 basis points, with effect from October 1, 2022," it said. This is the seventh rate increase undertaken by HDFC in the last five months.
State-owned Bank of Baroda followed HDFC in raising its repo-linked lending rate by 50 basis points to 8.45 percent.
With effect from October 1, Punjab National Bank (PNB) also updated its marginal cost of funds-based lending rate (MCLR), preceding HDFC and Bank of Baroda. Its MCLR for one month is currently 7.15 percent.
Additionally, the base rate of the bank was increased from 8.75 to 8.80 percent. The repo-linked lending rate (RLLR) will increase from 7.90% to 8.40% in interest rate. Following the RBI's 50 bps rate increase on Friday, more rate increases are anticipated.
RBL Bank and IndusInd Bank, two lenders in the private sector, have also increased their MCLR. Across all tenures, IndusInd Bank has raised its MCLR by 5 to 10 basis points. Its current overnight to three-year MCLR ranges from 8.30 to 9.80 percent.
The lending rate across all tenors at RBL Bank increased by 20 bps. The MCLR now ranges from 8.25 to 9.45 percent for the overnight to one-year period.
The lending rate at RBL Bank increased by 20 basis points for all tenors. Its overnight to one-year MCLR now ranges between 8.25 and 9.45 percent.
How does it affect Lenders and Borrowers?
The action would make credit more expensive for borrowers by raising their equated-monthly instalments (EMIs) on their loans. Additionally, it will enable lenders to charge borrowers higher borrowing costs.
The repo rate was raised by the RBI on Friday by 50 basis points to 5.9%, marking the fourth straight increase. The RBI's rate-setting panel has increased rates by a total of 190 basis points over the course of the last four reviews of the monetary policy since May of this year. The interest rate at which the RBI lends money to commercial banks is known as the repo rate.
Interest Rate Hikes On Deposits
Banks are increasing their deposit interest rate options in addition to lending rates. Beginning on October 1, RBL Bank revised the interest rates on fixed deposits under Rs 2 crore. For deposits maturing in 725 days, it will now offer a maximum interest rate of 7.25 percent for the general public and 7.75 percent for seniors.
On fixed deposits under Rs 2 crore, ICICI Bank has also increased interest rates by up to 25 basis points (bps). Depending on the tenure, which can be between 7 days and 10 years, its most recent interest rates will now be in the range of 3% to 6.10 percent.
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
 "Representational Image")
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}