ICICI Bank, PNB, Bank of Baroda lift loan rates post RBI rate hike

Following a 50-basis-point rate hike by the Reserve Bank of India (RBI), private lender ICICI Bank and state-owned Punjab National Bank and Bank of Baroda raised lending rates.

On Friday, the RBI’s Monetary Policy Committee raised the repo rate to 5.40 per cent from 4.90 per cent, taking the benchmark policy rate to a three-year high.

Consequently, several banks announced increases in loan rates, which are linked to external benchmarks.

ICICI Bank External Benchmark Lending Rate (I-EBLR) is referenced to RBI policy repo rate with a mark-up over the repo rate. "I-EBLR is 9.10 per cent p.a.p.m. effective August 5, 2022,” a notification on the private bank’s website read.

Bank of Baroda said that retail loans, which were applicable under its repo-linked lending rate, would now have an interest rate of 7.95 per cent, reflecting a spread of 2.55 per cent over the repo rate.

Punjab National Bank's (PNB) repo rate-linked lending rates for state and central government guaranteed entities, corporates, including Non-Banking Financial Companies (NBFCs) and A-rated corporate borrowers have been raised.

For tenures of one year to less than three years, the lending rates are in the range of 7.40 per cent to 7.80 per cent.

Loan rates for tenures of three years to less than five years are in the band of 8.00-8.40 per cent, and those for five years to less than 10 are in the range of 8.40-8.80 per cent. PNB’s lending rates for tenures of 10 years to less than 15 years now stand at 8.90-9.30 per cent.

RBI, in September 2019, had launched the external benchmark linked method for new floating rate for personal-, retail-loans and lending to micro and small enterprises.

Apart from the repo rate, the benchmarks that are used are yields on government securities such as 91-day and 182-day Treasury Bills.