HDFC, ICICI Bank raise retail lending rates after RBI policy, follow SBI, PNB; loans get this much costlier

HDFC (Housing Development Finance Corporation) and ICICI Bank have raised lending rates by up to 50 basis points (bps) days after the Reserve Bank of India increased the repo rate. HDFC and ICICI Bank’s move follows other lenders in recent days such as HDFC Bank, SBI (State Bank of India), and PNB (Punjab National Bank), which recently raised interest rates on loans by 35-50 bps. Earlier this week, the RBI’s MPC raised the key monetary policy rate by 50 bps to 4.9 per cent.

HDFC said in a stock exchange filing Thursday it has raised retail lending rate on housing loans by 50 basis points (bps), with effect from June 10. “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 June 10, 2022,” it said in a filing.

ICICI Bank also said it has raised lending rates by 50 basis points as it is referenced to RBI policy rates. “ICICI Bank External Benchmark Lending Rate (I-EBLR) is referenced to RBI Policy Repo Rate with a mark-up over Repo Rate,” the lender said on its website. ICICI said effective June 8, I-EBLR is 8.60 per cent p.a.p.m. effective June 8, 2022.

The RBI of India has raised lending rates by 90 basis points in two months in order to fight the spiking inflation. RBI’s MPC voted unanimously this week to hike repo rates. Economists expect further front-loaded rate hikes in the upcoming August meeting from the RBI. Thereafter the central bank will decide on the course of policy action depending on how growth and inflation evolve, experts have said.

Moves by ICICI and HDFC come days after the country’s private private lender HDFC Bank hiked interest rates across all tenures and across categories such as housing, vehicle and personal loans by 35 bps from June 7. Punjab National Bank also said this week that with effect from June 9, the state-owned lender has increased its Repo Linked Lending Rate (RLLR) by 50 basis points. The RLLR has been raised from 6.90 percent to 7.40 percent. Earlier this month, the State Bank of India raised home loan external benchmark lending rate by 40 basis points to 7.05 percent + CRP and the increased interest rates are effective from June 1, 2022.

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