The Reserve Bank has increased the repo rate by 50 basis points.
Reserve Bank of India increased the repo rate due to which most of the banks have increased the interest rates for personal loans, vehicle loans and home loans. In May and June together, RBI has increased the repo rate by 0.90 percent.
In this meeting, the Monetary Policy Committee of the Reserve Bank decided to increase the repo rate by 50 basis points. repo rate (repo rate hikeBanks decided to increase the interest rate for other types of loans including home loans, personal loans and car loans. ICICI Bank, Bank of Baroda, Punjab National Bank (PNB), Bank of India, Indian Bank, Indian Overseas Bank and the country’s major home lenders (home loan lenders) Many banks and financial institutions, including HDFC Limited, have announced an increase in loan rates for their customers in the last two days. At the repo rate, RBI gives loans to banks for their short-term borrowing needs. In this way, by increasing the repo rate, the finance from RBI becomes expensive for banks and then they also increase the interest rates on loans given to retail customers on their behalf.
In its bi-monthly monetary review on June 8, RBI had announced a major hike in the repo rate by 0.50 per cent. Earlier on May 4, RBI had suddenly increased the repo rate by 0.40 percent without any pre-determined plan. In this way, in a very short time, a total increase of 0.90 percent has been done in the repo rate. Now the repo rate is 4.90 percent. To deal with inflationary pressures, RBI has decided to increase the repo rate.
ICICI Bank hikes EBLR to 8.6 percent
Soon after, private sector ICICI Bank increased the external benchmark lending rate linked to repo from 8.10 per cent to 8.60 per cent. Public sector Punjab National Bank has also increased the repo-linked lending rates to 7.40 per cent from the earlier 6.90 per cent. Public sector Bank of Baroda has also increased the RLLR to 7.40 percent.
HDFC Ltd raises RBLR by 50 basis points
Private sector HDFC Limited has also increased its Retail Prime Lending Rates for home loans by 0.50 percent. The country’s largest bank State Bank of India revised its EBLR a few days before the announcement of monetary policy.
Indian Bank hikes RLLR to 7.75 percent
Indian Bank has increased the RLLR to 7.70 percent and Bank of India to 7.75 percent. Chennai-based Indian Overseas Bank has also increased the RLLR to 7.75 percent. Pune-based Bank of Maharashtra has also increased the RLLR from 7.20 per cent to 7.70 per cent with immediate effect.
Canara Bank hikes MCLR to 7.4 percent
Canara Bank had increased the one-year MCLR from 7.35 per cent to 7.40 per cent with effect from June 7. Most consumer loans are linked to the one-year MCLR rate. The MCLR system came into effect from April 1, 2016. From October 1, 2019, all banks will have to lend only at an interest rate linked to an external benchmark such as the RBI’s repo rate or treasury bill yields. Because of this, the pace of adoption of monetary policy by banks has increased rapidly.
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