ICICI Bank, PNB and Bank of Baroda raise lending rates after RBI rate hike

Following a 50 basis point rate hike by the Reserve Bank of India (RBI), private lender ICICI Bank and state-owned companies Punjab National Bank and Bank of Baroda raised lending rates.

On Friday, the RBI’s monetary policy committee raised the repo rate to 5.40% from 4.90%, taking the benchmark policy rate to its highest level in three years.

As a result, several banks have announced increases in lending rates, which are linked to external benchmarks.

ICICI Bank External Benchmark Lending Rate (I-EBLR) is referenced to the RBI policy repo rate with a markup over the repo rate. “I-EBLR is 9.10% papm effective August 5, 2022,” a notification on the private bank‘s website reads.

Bank of Baroda said retail loans, which were applicable under its repo-linked lending rate, would now bear an interest rate of 7.95%, reflecting a 2.55% spread over the repo rate.

Punjab National Bank (PNB) Repo Rate Linked Loan Rates for State and Central Government Guaranteed Entities, Corporates including Non-Banking Financial Corporations (NBFCs) and A-rated Corporate Borrowers, have been noted.

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For terms of one year to less than three years, loan rates are around 7.40% to 7.80%.

Loan rates for terms of three to less than five years are between 8.00 and 8.40%, and those for terms of five years to less than 10 years, between 8.40 and 8.80%. PNB lending rates for terms of 10 to less than 15 years are now between 8.90 and 9.30%.

RBI, in September 2019, had launched the method linked to an external benchmark for a new floating rate for personal loans, retail loans and micro and small business loans.

Besides the repo rate, the benchmarks used are the yields of government securities such as 91-day and 182-day Treasury bills.

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