State Bank of India (SBI) and ICICI Bank have raised their external benchmark lending rate (EBLR) and repo linked lending rate (RLLR). As a result, the equated monthly installments (EMIs) will get expensive for those who avail home loans benchmarked against EBLR and RLLR.
Central Bank, Bank of Baroda, IDFC First Bank and Bank of Maharashtra have also raised their lending rates.
These moves comes after Reserve Bank of India (RBI) hiked the repo rate by 50 basis points in its Monetary Policy Committee.
With the new rate revision, the SBI’s EBLR stands at 8.55 percent and RLLR stands at 8.15 percent.
Meanwhile, ICICI Bank has upped its External Benchmark Lending Rate (EBLR) by 15 bps. The bank also increased all tenors of its Marginal Cost of Funds Based Lending Rate (MCLR) rates by 20 bps and now the overnight to one-month MCLR stands at 7.85 percent, three months MCLR is 7.90 percent, 6 months MCLR is 8.05 percent and 1-year MCLR stands at 8.10 percent.
As mentioned, EMIs will get expensive for those who take
home loans against the MCLR, EBLR and RLLR.
There is a reset-period for loans, after which the rates get revised for the borrower.Why are banks raising rates?
The decision comes in the wake of Reserve Bank of India (RBI) increasing benchmark policy rates by 50 bps on Friday. With this repo rate hike and three previous increases, the overall lending rates have surged by at least 190 basis points.
Why are loans impacted by RBI's decision?
Generally, when
RBI hikes the repo rate, it increases the cost of funds for banks. This means that banks will have to pay more for the money they borrow from RBI. Consequently, banks pass on the cost to borrowers by increasing their loan interest rates, making EMIs costlier.
As a result, both new and existing borrowers witness an increase in their loan interest rates.
First Published: Oct 3, 2022 3:11 PM IST
