Banks led by SBI hike lending rate by 50 bps after RBI raises policy rate

NL Correspondent
Host of lenders led by State Bank of India (SBI) and Bank of India hiked lending rates after the Reserve Bank raised the benchmark
interest rate to tame inflation.
The hike has been effected in their benchmark rate linked to the repo rate, which increased by half a percentage point to 5.9 per
cent.
Even financial institutions like mortgage lender HDFC Ltd hiked the lending rate by 50 basis points effective Saturday.
This is the seventh rate increase undertaken by HDFC in the last five months with an aggregate hike of 1.90 per cent in line with the
RBI.
SBI raised the external Benchmark based lending rate (EBLR) and Repo-Linked Lending Rate (RLLR) by 50 basis points, as per
the information posted on the bank's website.
SBI's EBLR rose to 8.55 per cent and RLLR increased by similar 50 basis points to 8.15 per cent, effective Saturday. Banks add Credit Risk
Premium (CRP) over the EBLR and RLLR while giving any kind of loan, including housing and auto loans. With the increase in lending rate,
EMIs will go up for those borrowers who have availed loans on EBLR or RLLR.
From October 1, 2019, all banks including SBI have migrated to an interest rate linked to an external benchmark such as RBI's repo
rate or Treasury Bill yield. As a result, monetary policy transmission by banks has gained traction. Another state-owned lender Bank of
India raised its effective RBLR to 8.75 per cent.
The rate increase by the Bank of India was effective from Friday, as per the revised repo rate of 5.9 per cent, the bank
website said. With the repo rate increase, ICICI Bank External Benchmark Lending Rate (I-EBLR) will rise to up to 9.60 per cent.