Following the Reserve Bank of India’s (RBI’s) decision to raise the repo rate by 50 basis points (bps) to 5.9 per cent on September 30, several banks, including the country’s largest lender State Bank of India (SBI), have increased lending rates.
SBI has raised its external benchmark-based lending rate (EBLR) by 50 bps to 8.55 per cent and its repo rate-linked lending rate by the same margin to 8.15 per cent, revealed the bank’s website. The changes are with effect from October 1.
Meanwhile, private sector giant ICICI Bank has increased its EBLR to 9.25 per cent (effective from September 30). ICICI Bank has also increased its marginal cost of funds-based lending rate (MCLR), following the RBI’s rate increase. The private bank’s MCLR across tenures has been revised to 7.85-8.1 per cent, effective from October 1.
Starting October 1, 2019, all banks made the transition to a regime in which interest rates are linked to an external benchmark.
The external benchmarks include the repo rate or yield on treasury bills issued by the central government. The RBI took the step to spur better transmission of its interest-rate decisions.
Private lender YES Bank has also increased its MCLR, with its revised rates for overnight to one-year tenures now in a range of 8.2-9.65 per cent, effective from October 1.
“The RBI repo rate applicable from October 1 is 5.4 per cent. The bank shall add components in line with its spread framework. For existing loans linked to the six-month certificate of deposit rate, the rate applicable from October 1, 2022, is 6.79 per cent,” YES Bank said on its website.
State-owned lender Bank of India has also increased its MCLR. The overnight MCLR has been raised by 10 bps to 6.95 per cent. The one-year MCLR has been increased by 10 bps to 7.8 per cent, while the three-year MCLR has been raised by 20 bps to 8 per cent.
Private sector lending heavyweight HDFC has also raised interest rates on retail prime lending rates effective October 1. HDFC has hiked rates by 50 bps in line with the rate hike announced by the RBI. Starting from the next reset date, the increased rates will reflect on monthly EMIs for borrowers.
As on September 9, bank credit growth was at 16.2 per cent year-on-year — a nine-year high. Over the same period, deposit growth lagged behind at 9.5 per cent.