More lenders from porivate and public sectors have joined the list of banks increasing their interest rates on loans in response to Reserve Bank of India's repo rate hike of 35 basis points. Loans are now costlier at Bank of Baroda, Karur Vysya Bank, RBL Bank, Bank of Maharashtra, Central Bank of India, Punjab National Bank, DCB Bank, UCO Bank, Bandhan Bank and Jammu and Kashmir Bank as the repo rate now stands at 6.25%.
Immediately after RBI's rate hike, Indian Bank, Indian Overseas Bank and Bank of India were first to raise repo-based lending rates. Almost 50% of all loans are linked to external benchmarks higher interest rates will increase costs as well. In line with the rate hike cycle, interest cost on consumers of retail and micro, small and medium enterprises will increase by Rs 686 billion, and affect sales.
While raising lending rates, RBI Governor Shaktikanta Das that they are closely monitoring the process of transmission as rate hikes are being passed on to lending and deposit rates faster than before.
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