The impact of a 25 basis point rise in the repo rate by the RBI's MPC has started weighing in on borrowers as many large banks, including Punjab National Bank, Indian Bank and Bank of Baroda, announced an increase in their lending rates, making loans expensive for borrowers. The bank started announcing a hike in lending rates hours after the central bank raised its benchmark policy rate.
PNB Announces Hike In Lending Rates
Punjab National Bank (PNB), in a regulatory filing, said that it has raised rates consequent upon an increase in the repo rate by the RBI.
The nation’s second largest public sector bank hiked the Repo Linked Lending Rate (RLLR) from 8.10 per cent (including BSP of 0.35 per cent) to 8.35 per cent (including BSP of 0.35 per cent. The revised rates will come into effect from October 8.
However, the Marginal Cost of Lending Rate (MCLR) and Base Rate would remain unchanged.
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Bank Of Baroda And Bank Of India
Bank of Baroda has increased its repo-based lending rate to 8.15 per cent from the current 7.90 per cent. This is an increase of 25 basis points.
At the same time, Bank of India and Indian Overseas Bank have also increased their repo-based lending rate (RBLR) to 8.35 per cent with effect from October 8.
The revision comes in the wake of the RBI's hike in the repo rate, the Bank of England said in a regulatory filing.
Other Banks
Chennai-based public sector lender Indian Bank also increased its Repo Linked Benchmark Lending Rate (RBLR) to 8.20 per cent from 7.95 per cent.
In line with the increase in the policy repo rate of 25 basis points by RBI''s Monetary Policy Committee (MPC), the revised rate of the bank would be effective from October 8, Indian Bank said in a separate filing.
On the private sector side, Tamilnad Mercantile Bank increased its Repo Linked Lending Rate (RLLR) to 8.5 per cent from the existing 8.25 per cent.
Other lenders are expected to announce an increase in their benchmark lending rate in line with RBI's decision.
RBI Raises Repo Rate
Earlier, after a three-day monetary policy committee meeting, the Reserve Bank of India (RBI) raised the benchmark interest rate by 25 basis points to 5.50 per cent. This is the first hike in nearly four years. It signalled that more hikes are likely as rising inflation and a weakening currency are leading to policy changes.
The six-member monetary policy committee voted unanimously to increase the repo rate. This is the first such hike since February 2023.