Sunday, Jul 03, 2022
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Your Loan EMI Is Set To Go Higher As Lenders Begin To Increase Interest Rates

Mortgage lender HDFC Ltd on Saturday announced an increase in its benchmark lending rate by 30 basis points (bps), a move that will make loans dearer for both existing and new borrowers

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PNB has hiked lending rates by 40 basis points File Photo

Loan equated monthly instalments (EMIs) are set to go higher as lenders have started  to increase interest rates days after the Reserve Bank of India surprised with a repo rate and cash reserve ratio (CRR) hike. The Reserve Bank of India on Wednesday raised the key lending rate - repo rate - by 40 basis points to counter the rising inflation which has been above its tolerance level of 6 per cent from the last three months till March.

In a move to withdraw excess liquidity from the banking system, the RBI also decided to increase the cash reserve ratio (CRR) by 50 basis points to 4.5 per cent. CRR hike will lead to withdrawal of Rs 87,000 crore, and will be effective from midnight of May 21, Governor Das said.

Mortgage lender HDFC Ltd on Saturday announced an increase in its benchmark lending rate by 30 basis points (bps), a move that will make loans dearer for both existing and new borrowers.

The revised rates for new borrowers at HDFC range between 7 per cent and 7.45 per cent, depending on credit and loan amount. The existing range is 6.70 per cent to 7.15 per cent.

For existing customers, the rates would rise by 30 basis points or (0.3 per cent).

Earlier this month, HDFC had increased its benchmark lending rate by 5 basis points making EMI for existing borrowers expensive.

Country's leading state-run lender Punjab National Bank also hiked lending rates by 40 basis points. The bank hiked its external benchmark linked lending rate by 0.40 per cent to 6.90 per cent with effect from June 1.

PNB also increased the savings deposit rates for various tenors. For term deposits of less than Rs 2 crore, it has raised the interest rates to up to 5.10-5.15 per cent. For single term deposits of Rs 2 crore and up to Rs 10 crore, customers will get interest rates in the range of 3.50 - 4.05 per cent per annum.

Several lenders, including ICICI Bank, Bank of Baroda and Bank of India, raised interest rates following the RBI's surprise repo rate hike on Wednesday.

Meanwhile, a report by India Ratings suggested that unexpected interest rate hike by the RBI on Wednesday will have the banking system on average making a 10-15 bps gains on the yields, with private banks making larger gains as 57 per cent of their loans are linked to external benchmark rate and 40 per cent to the marginal cost of lending rates.

(With PTI inputs)

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