Archive · 8 Oct 2026
Banks Raise Lending Rates After RBI’s 25-Basis-Point Hike
The Reserve Bank of India raised its main interest rate on October 7.
The new rate is 5.50%, up from 5.25%.
All six members of its policy committee supported the increase.
The committee also said its approach was “calibrated tightening,” which signals that a rate cut is not expected soon.
Several banks raised rates that are linked to the RBI’s rate, with most changes starting October 8.
This may make some floating-rate loans more expensive, though the effect depends on each loan’s terms.
HDFC Bank did something different and lowered its MCLR.
Reports list six banks among the rate increasers, while one also includes Karur Vysya Bank.
The Reserve Bank of India raised its repo rate by 25 basis points, from 5.25% to 5.50%, on October 7.
The six-member Monetary Policy Committee voted unanimously and shifted its stance to “calibrated tightening,” signalling no near-term rate cut.
PNB, Indian Bank, Bank of Baroda, Bank of India, Indian Overseas Bank and Tamilnad Mercantile Bank raised repo-linked or repo-based rates, mostly effective October 8.
One report also names Karur Vysya Bank among the lenders raising rates; reports differ on whether six or more banks were covered.
HDFC Bank cut its MCLR by 5–15 basis points from October 7, rather than raising it; floating-rate borrowers may face higher costs.
- Who
- The Reserve Bank of India, its Monetary Policy Committee, and banks including PNB, Indian Bank, Bank of Baroda, Bank of India, Indian Overseas Bank and Tamilnad Mercantile Bank.
- What
- The RBI raised the repo rate to 5.50%, prompting several banks to raise lending benchmarks; HDFC Bank cut its MCLR.
- When
- The RBI decision was announced on October 7, 2026; most reported bank increases took effect October 8.
- Where
- India.
- Why
- The bank rate changes followed the RBI’s repo-rate increase; articles cite rising inflation and a weakening currency as factors behind the RBI’s policy shift.
- RBI repo rate
- Raised 25 basis points, from 5.25% to 5.50%, on October 7.
- MPC vote and stance
- All six members voted for the increase; the stance shifted to “calibrated tightening.”
- PNB
- RLLR rose from 8.10% to 8.35%, effective October 8; MCLR and Base Rate were unchanged.
- Other reported bank rates
- Indian Bank: 8.20%; Bank of Baroda: 8.15%; Bank of India and Indian Overseas Bank: 8.35%; Tamilnad Mercantile Bank: 8.50%.
- Karur Vysya Bank
- One report says its External Benchmark Repo Linked Rate rose from 8.55% to 8.80%.
- HDFC Bank
- Cut MCLR by 5–15 basis points across tenures, effective October 7, to a range of 7.75%–8.55%.
- Borrower impact
- Floating-rate borrowers may see higher interest costs; depending on loan terms, banks may increase EMIs or extend repayment periods.
- Economic forecasts
- One report says the RBI raised its FY27 GDP growth forecast from 6.7% to 7.1% and inflation projection from 5% to 5.2%.
Sources
Your Home Loan EMI May Rise From October 8, These 6 Banks Have Increased Lending Rates After RBI's Big Move
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