HDFC, IOB raise lending rates after RBI announces hike in repo rate

HDFC on Thursday announced a hike in its retail prime lending rate, while state-owned Indian Overseas Bank raised the repo-based lending rates.

The rate revision by the lender comes a day after the Reserve Bank of India raised the key lending rates or repo rate by 50 basis points to tame high inflation, which essentially meant the cost of borrowings were going to rise. Repo rate is the rate at which the central bank RBI lends short-term funds to banks.

HDFC has increased its Retail Prime Lending Rate (RPLR) for housing loans, on which its Adjustable Rate Home Loans (ARHL) are benchmarked, by 50 basis points, with effect from June 10, 2022, it said in a regulatory filing.

The new rate will come into effect from June 10, it said on Thursday.

Effectively, now home loan rates of the lender would start from 7.55 per cent.

Indian Overseas Bank raised its repo linked lending rate by the same margin.

''We... inform that our bank has revised the RLLR (repo linked lending rate) to 7.75 per cent (i.e. 4.90 per cent + 2.85 per cent = 7.75 per cent) with effect from 10th June 2022,'' IOB said in a filing.

Earlier on Wednesday, three state-owned lenders Punjab National Bank, Indian Bank and Bank of India had announced raising their respective repo based lending rates by 0.50 per cent each.

The Reserve Bank has upped the repo rate -- at which it lends short term money to banks -- to 4.90 per cent as rising inflation has been a cause of concern amid geopolitical tensions.

(With PTI inputs)