Sign in Subscribe
Banks (Finance)

Banks Hike Loan Interest Rates Following RBI's 50 BPS Rate Hike

Strategic Insights

— 1 min read

The Reserve Bank of India (RBI) raised the repo rate by 50 basis points in its August monetary policy meet, citing concerns of inflation. This move has prompted several banks, including State Bank of India (SBI), ICICI Bank, Bank of Baroda, Canara Bank, and Punjab National Bank (PNB), to increase their loan interest rates. The RBI's aim is to reduce inflation by raising the cost of consumer loans through external benchmark-based lending rates. This rate hike is expected to increase the EMI outlay for borrowers, especially those with floating rate personal loans and retail loans.

Key Takeaways:

  • SBI has hiked its external benchmark-based lending rate (EBLR) to 8.05%+CRP+BSP from 7.55%+CRP+BSP, effective August 15, 2022.
  • ICICI Bank's I-EBLR is 9.10% p.a.p.m., referenced to RBI Policy Repo Rate with a mark-up over Repo Rate, effective August 5, 2022.
  • Bank of Baroda has increased its Baroda Repo Linked Lending Rate (BRLLR) to 7.95%, made up of the current RBI repo rate and a mark-up/base spread, effective August 6, 2022.
  • Canara Bank has increased its repo rate-linked lending rate by 50 basis points, from 7.80% to 8.30%, effective August 7, 2022.
  • PNB has hiked its repo-linked lending rate to 7.90% with effect from August 8, 2022.
  • The RBI established a system in September 2019 to link all new floating rate personal loans, retail loans, and loans to micro- and small businesses to external benchmarks, to improve the transmission of monetary policy decisions.

Statistics:

  • The revised EBLR rates for various banks are: SBI (8.05%+CRP+BSP), ICICI Bank (9.10% p.a.p.m.), Bank of Baroda (7.95%), Canara Bank (8.30%), and PNB (7.90%).
  • The RBI raised the repo rate by 50 basis points in its August monetary policy meet, citing concerns of inflation.
  • The RBI introduced a system in September 2019 to link all new floating rate personal loans, retail loans, and loans to micro- and small businesses to external benchmarks.

Sources:

  • State Bank of India: "SBPS Newsletter Volume 1, 2022"
  • ICICI Bank: ICICI Bank website, "RBI Policy Repo Rate effective August 5, 2022"
  • Bank of Baroda: Bank of Baroda website, "Baroda Repo Linked Lending Rate (BRLLR)"
  • Canara Bank: Canara Bank website, "Loan Rates"
  • Punjab National Bank: BSE filing, "Consequent upon an increase in repo rate by RBI"

Read more