In an out of turn Monetary Committee Meeting (MPC), the Reserve Bank on Wednesday announced to hike the benchmark repo rate -- the short term lending rate it charges to banks -- by 0.40 percent to 4.40 percent with immediate effect, aimed at taming the rising inflation caused by the global geopolitical situation.
Post-this announcement, at least five banks--private sector banks ICICI, Kotak Mahindra Bank, Bandhan Bank, Jana Small Finance Bank, state-owned Bank of Baroda have announced hike in interest rates.
Private sector bank ICICI Bank has revised the external benchmark lending rate (EBLR) to 8.10 percent. RBI policy repo rate effective May 4, 2022, is 4.40 percent, ICICI Bank said.
''ICICI Bank External Benchmark Lending Rate (I-EBLR) is referenced to RBI policy repo rate with a mark-up over repo rate. I-EBLR is 8.10 percent p.a.p.m. effective May 4, 2022,'' the bank said.
The EBLR moves up or down in accordance with the movement in the repo rate.
State-owned Bank of Baroda raised the rate to 6.90 percent after the RBI hiked the key repo rate. It also revised the external benchmark linked lending rate, with effect from May 5, 2022.
''For retail loans applicable BRLLR is 6.90 percent with effect from May 5, 2022 (current RBI repo rate:4.40 percent plus mark up of 2.50 percent),'' Bank of Baroda said.
BoB had introduced Baroda Repo Linked Lending Rate (BRLLR) in respect of all retail lending products from October 2019.
Private sector lender Kotak Mahindra Bank Ltd on Thursday announced a rate increase in fixed deposit (FD) interest rates across multiple tenor baskets for retail customers. The increase is effective from May 6, on all deposits below Rs 2 crore.
Private sector lender Bandhan Bank has increased interest rates on fixed deposits of less than Rs 2 crore maturing in one to two years by 50 basis points.
Jana Small Finance Bank has revised interest rates on FDs by 25 Bps with effect from May 5.
The country's largest lender State Bank of India (SBI) charges the EBLR at 6.65 percent plus the credit risk premium, with effect from April 1, 2022.
EBLR is a sum of external benchmark rate (EBR) and credit risk premium (CRP). Last month, SBI hiked the marginal cost-based lending rate (MCLR) by 10 basis points across all tenures.
With the revision, the benchmark one-year MCLR -- against which most of the consumer loans are priced -- increased to 7.10 percent per annum.
The rate increase in the EBLR will push up the cost for most of the personal loans, auto and home loans for customers.
In September 2019, the RBI had advised all banks to mandatorily link the interest rate to an external benchmark (which is the repo rate) for all new floating rate personal or retail loans as well as for floating-rate loans to MSMEs, with effect from October 1, 2019.
(With inputs from PTI)