Banks raise lending rates before RBI’s policy meet Banks have raised their interest rates on loans by 10 basis points. i.e., 100bps is equal to 1 percent of point. Various public, as well as private sector banks, have increased their interest rates which are ahead of RBI’s monetary policy committee. Among all the banks, HDFC Bank, State Bank of India, Union Bank, Kotak Mahendra Bank and Punjab National Bank are the topmost banks which have raised their interest rates. However, the Monetary Policy Committee’s decisions are yet to be announced.
As per the reports, the Marginal Cost of Fund Based Lending Rate (MCLR) of State Bank of India stands at 7.9%. Whereas earlier it was 7.8% The report was published on the official website of the State Bank of India.
The Marginal Cost of Fund Based Lending Rate (MCLR) in the period of three years has increased to 8.45 percent from 8.35 percent.
The Monetary Policy Committee is going to announce its decision on 6th June of this year.
As per the increase in the Marginal Cost of Fund Based Lending Rate (MCLR) of the State Bank of India, reports elaborately describe that it was the second rate hike in the year 2018.
Whereas the HDFC Bank has increased its Prime Lending Rate in the retail sector. The Prime Lending Rate is the benchmark for home loans. In the same way, ICICI Bank has also raised its MCLR. Which is up to 8.40 percent. It has been reported that initially, HDFC home loans were around 8.5 percent. However, the new interest rates will come into effect on 2nd June 2018.
Punjab National Bank has raised one-year MCLR by 8.4%. Earlier it was 8.3%. Whereas Union Bank has increased its MCLR by 8.45%.
Kotak Mahendra Bank has increased its MCLR by 20bps to 8.9% which is very high among other banks.
Similarly, other banks are also likely to follow suit. Most of the car loans and home loans are linked to the Marginal Cost of Fund Based Lending Rate.
Whereas various regional banks have increased its interest rates on deposits. Among them, Karnataka Bank has increased its rate in savings deposit account from 7.10% to 7.25%. Karnataka Bank is a Mangaluru based bank. The increase in the number of deposit rates will result in the higher lending rates.
Whereas all the above mentioned have not even wait for the decision of the Reserve Bank of India. They moved ahead and increased their interest rates. Recent reports mentioned that Axis Bank has also hiked its rates to 7.4%.