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Banks (Finance)

Banks Raise Base Rates, EMIs to Increase

Strategic Insights

— 1 min read

Borrowers in India are likely to see an increase in the equated monthly installments (EMIs) on loans taken from banks, as these lenders revise their base rates and prime lending rates upwards. The country's largest private lender, ICICI Bank, has already raised its home loan interest rate to 8.5 per cent, while HDFC Bank has increased its base rate by 0.25 percentage points. Several other banks, including Punjab National Bank, Axis Bank, and Kotak Mahindra Bank, have also raised their base rates, with only State Bank of India and Housing Development Finance Corp (HDFC) holding back for now.

Key Takeaways:

  • ICICI Bank has increased its home loan interest rate to 8.5 per cent, effective immediately.
  • HDFC Bank has raised its base rate by 0.25 percentage points, from 7.25 per cent to 7.50 per cent.
  • Punjab National Bank has hiked the minimum rate of interest on loans to 8.5 per cent from 8 per cent.
  • Axis Bank, Kotak Mahindra Bank, and foreign lender Standard Chartered Bank have raised their base rates by up to 25 basis points.
  • State Bank of India has kept its base rate unchanged at 7.5 per cent, but may raise it soon.
  • Housing Development Finance Corp (HDFC) has not raised interest rates yet.
  • The increase in base rates is primarily due to the Reserve Bank of India's tight money regime to combat inflation.
  • ICICI Bank's base rate increase came into effect from Tuesday, while other banks' rate hikes were effective from 30 September.

Statistics:

  • ICICI Bank's home loan interest rate has been increased to 8.5 per cent.
  • HDFC Bank's base rate has been raised by 50 basis points.
  • Punjab National Bank's minimum interest rate on loans is now 8.5 per cent.
  • Axis Bank, Kotak Mahindra Bank, and Standard Chartered Bank have raised their base rates by up to 25 basis points each.
  • Reserve Bank of India's short-term lending (repo) and borrowing (reverse repo) rates were raised in the September monetary policy review.
  • Housing Development Finance Corp (HDFC) has not raised interest rates yet, despite other banks' rate increases.
  • State Bank of India's base rate remains unchanged at 7.5 per cent.

Sources:

  • ICICI Bank
  • HDFC Bank
  • Punjab National Bank
  • Axis Bank
  • Kotak Mahindra Bank
  • Standard Chartered Bank
  • State Bank of India
  • Housing Development Finance Corp (HDFC)
  • Reserve Bank of India

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