Hours after RBI’s move to increase repo rate by 35 basis points, a number of lenders, including Bank of India and HDFC Bank, on Wednesday hiked their benchmark lending rates, a move that would result in increase in EMI. The effective Repo Based Lending Rate (RBLR) with effect from December 7 is 9.10 per cent as per the revised repo rate (6.25 per cent), state-owned Bank of India posted on its website.
Private sector HDFC Bank has hiked its marginal cost of funds-based lending rate (MCLR) effective Wednesday.
The one-year MCLR, which acts as benchmark for many consumer loans, has increased by 50 basis points to 8.60 per cent, HDFC Bank website said.
ICICI Bank already raised its MCLR rate effective December 1. Following the revision, the one year benchmark rate was raised by 50 basis points to 8.40 per cent from 7.90 per cent earlier.
The benchmark one-year MCLR is used to price most of consumer loans such as auto, personal and home loans.
Earlier in the day, the Reserve Bank of India (RBI) hiked the key repo rate by 35 basis points to 6.25 per cent, the fifth straight increase since May.
In all, the RBI has raised the benchmark rate by 2.25 per cent since May this year.
Consequently, the standing deposit facility (SDF) rate is adjusted to 6 per cent and the marginal standing facility (MSF) rate and bank rate to 6.50 per cent.
Other banks are also expected to follow suit after the RBI raised the key interest rate by 35 basis points. It is just a matter of time when banks would undertake External Benchmark based Lending Rate (EBLR) and Repo-Linked Lending Rate (RLLR) hikes in line with the repo rate.