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Banks Raise Lending Rates After RBI's 25-Basis-Point Hike
The Reserve Bank of India raised the interest rate it uses as a benchmark by 25 basis points, bringing it to 5.50 per cent.
The decision was made unanimously by its six-member Monetary Policy Committee.
After the announcement, several banks raised lending rates linked to the RBI's repo rate.
The new rates at the listed public-sector banks take effect on October 8.
Tamilnad Mercantile Bank also increased its rate.
When banks raise lending rates, borrowing can become more expensive for customers.
Punjab National Bank said it would leave two other lending-rate measures unchanged.
The RBI's new policy stance was described as calibrated tightening, with further hikes possible.
The Reserve Bank of India raised its repo rate by 25 basis points to 5.50 per cent.
The six-member Monetary Policy Committee voted unanimously for the increase and shifted its stance to calibrated tightening.
Punjab National Bank raised its Repo Linked Lending Rate to 8.35 per cent from October 8, while keeping its MCLR and Base Rate unchanged.
Indian Bank, Bank of Baroda, Bank of India and Indian Overseas Bank also raised repo-linked or repo-based lending rates by 25 basis points, effective October 8.
Tamilnad Mercantile Bank raised its Repo Linked Lending Rate to 8.5 per cent; other lenders were expected to announce increases.
- Who
- The Reserve Bank of India and several public- and private-sector banks, including Punjab National Bank, Indian Bank, Bank of Baroda, Bank of India, Indian Overseas Bank and Tamilnad Mercantile Bank.
- What
- The RBI raised its repo rate by 25 basis points to 5.50 per cent, prompting banks to increase lending rates linked to it.
- Where
- India.
- When
- The announcement was reported on October 7; several bank rate changes take effect October 8.
- Why
- The RBI cited rising inflation and a weakening currency as factors behind its policy shift.
Key facts
- RBI repo rate
- Raised by 25 basis points to 5.50 per cent.
- Policy vote
- The six-member Monetary Policy Committee voted unanimously.
- RBI stance
- Shifted to calibrated tightening.
- Punjab National Bank RLLR
- Raised from 8.10 per cent to 8.35 per cent, effective October 8.
- Indian Bank RBLR
- Raised from 7.95 per cent to 8.20 per cent, effective October 8.
- Bank of Baroda rate
- Repo Based Lending Rate raised from 7.90 per cent to 8.15 per cent.
- Tamilnad Mercantile Bank RLLR
- Raised from 8.25 per cent to 8.5 per cent.
Sources
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