ICICI Bank Ltd. has revised the external benchmark lending rate to 8.10%, and Bank of Baroda Ltd. raised the rate to 6.90% after the Reserve Bank of India hiked the key repo rate.
In an out of turn Monetary Committee Meeting, the Reserve Bank on Wednesday announced to hike the benchmark repo rate -- the short-term lending rate it charges to banks -- by 0.40% to 4.40% with immediate effect, aimed at taming the rising inflation caused by the global geopolitical situation.
The rate increase in the External Benchmark Lending Rate will push up the cost for most of the personal loans, auto and home loans for customers.
RBI policy repo rate effective May 4, 2022, is 4.40%, ICICI Bank said.
"ICICI Bank External Benchmark Lending Rate is referenced to RBI policy repo rate with a mark-up over repo rate. I-EBLR is 8.10% p.a.p.m. effective May 4, 2022," the bank said.
The EBLR moves up or down in accordance with the movement in the repo rate.
State-owned Bank of Baroda also revised the external benchmark linked lending rate, with effect from May 5, 2022.
"For retail loans applicable BRLLR is 6.90% with effect from May 5, 2022 (current RBI repo rate: 4.40% plus mark up of 2.50%)," Bank of Baroda said.
Bank of Baroda had introduced Baroda Repo Linked Lending Rate in respect of all retail lending products from October 2019.
The country's largest lender State Bank of India charges the EBLR at 6.65% plus the credit risk premium, with effect from April 1, 2022.
EBLR is a sum of external benchmark rate and credit risk premium.
Last month, SBI hiked the marginal cost-based lending rate by 10 basis points across all tenures.
With the revision, the benchmark one-year MCLR -- against which most of the consumer loans are priced -- increased to 7.10% per annum.
In September 2019, the Reserve Bank had advised all banks to mandatorily link the interest rate to an external benchmark (which is the repo rate) for all new floating rate personal or retail loans as well as for floating-rate loans to MSMEs, with effect from Oct. 1, 2019.
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