The ICICI Bank has raised its lending rates after the RBI increased the benchmark interest rate by 0.50 per cent on Friday.
The Reserve Bank of India (RBI) increased the key policy repo rate -- at which it lends short-term money to banks -- by 50 basis points or 0.5 per cent to a three-year high of 5.40 per cent.
ICICI Bank External Benchmark Lending Rate (I-EBLR) is referenced to RBI policy repo rate with a mark-up over repo rate, ICICI Bank said in a notification. "I-EBLR is 9.10 per cent p.a.p.m. (per annum payable monthly) effective August 5, 2022," it added.
Earlier this month, ICICI Bank had also revised the marginal cost of funds-based lending rate (MCLR) by 0.15 per cent across all tenors.
With the hike in I-EBLR, your home loan EMIs are also likely to increase.
After RBI’s rate hike, the average home loan rate in the country may reach 8.5 per cent, up from the current 8 per cent.
What is the external benchmark-based lending rate?
From October 1, 2019, the RBI ordered that banks establish a uniform external benchmark within a loan category.
External Benchmark Lending Rates (EBLR) are the lending rates set by the banks based on external benchmarks such as repo rate, 91 days Treasury bill and 182 days Treasury bill.
Every bank can choose any such external benchmark and link its lending rates. This would ensure a transparent and effective way of setting lending rates according to the macroeconomic scenario.
The following are four external benchmarking mechanisms:
The repo rate announced by the Reserve Bank of India.
The yield on a 91-day T-bill
The yield on the 182-day T-bill
Any Financial Benchmarks India Pvt. Ltd. developed market interest rate benchmarks.
