Following the Reserve Bank of India's announcement to hike its repo rate by 0.5 per cent to take it to 5.90 per cent, the State Bank of India has raised its loan rates by 50 basis points.
The country's largest public sector lender has raised the external Benchmark based lending rates (EBLR) and Repo-Linked Lending Rate (RLLR) by 50 basis points, taking them to 8.55 per cent and 8.15 per cent, respectively. The new rates came into effect on Saturday, October 1, reported news agency PTI.
Banks charge additional Credit Risk Premium (CRP)over the EBLR and RLLR while extending loans to borrowers. with the hiked rates, EMIs are set to get costlier across all loan categories, including home loans.
The final impact, however, on the monthly EMI will factor in various aspects.
RBI's 50 basis point hike, in the repo rate, is the fourth hike announced by the central bank this year. The hike is aimed at controlling inflation.
Since the first repo rate hike in May, the cumulative increase in an interest rate now stands at 190 basis points.
The current repo rate of 5.90 per cent is the highest since April 2019.
Repo rate is referred to the interest rate at which RBI lends to banks. Naturally, the hike in repo rate was expected to trigger a rise in the interest rate of loans offered by various banks in the country.
Hours after RBI's announcement, HDFC also followed the suit and hiked its lending rate by 50 basis points.
"HDFC increases its Retail Prime Lending Rate (RPLR) on Housing loans, on which its Adjustable-Rate Home Loans (ARHL) are benchmarked, by 50 basis points, with effect from October 1, 2022," the bank said in a statement.
Bank of India and ICICI bank have also announced an interest hike. The private sector bank also announced a 25-basis point hike in the fixed deposit of less than Rs crore.
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