ICICI Bank, Bank Of Baroda Increases Lending Rates: Pay Higher EMI For Home, Auto Loan & More
ICICI Bank has reportedly raised the external benchmark lending rate, and this comes after a mid-cyclic RBI rate hike.
The RBI has raised the benchmark lending rate or repo rate by 40 basis points (bps) to 4.40 percent.
ICICI Bank Increases External Benchmark Lending Rate
The rate of ICICI Bank has increased by 40 bps to 8.1 percent, as of Thursday.
The ICICI Bank has confirmed the hike on its official website as well. It said, “ICICI Bank External Benchmark Lending Rate” (I-EBLR) is referenced to RBI Policy Repo Rate with a mark-up over Repo Rate. I-EBLR is 8.10 percent p.a.p.m. effective May 4, 2022.
Additionally, the Bank of Baroda has also hiked the repo-linked lending rate by 40 bps to 6.90 percent.
It is the first time that the Monetary Policy Committee (MPC) has made an unscheduled release in the repo rate. This decision has been implemented in order to contain inflation that has been above the target of 6 percent for the last three months.
What Is External Benchmark Lending Rate?
The external benchmark lending rate is the lending rate that is set by the banks. These are based on external benchmarks such as the repo rate. It is the minimum interest rate at which commercial banks can lend.
The Base Lending Rate (BLR) system was introduced by the RBI in 2010, which went on to move to a Marginal Cost of Funds-based Lending Rate (MCLR) system in 2016. In October 2019, the External Benchmark-Linked Lending Rate (EBLR) regime was introduced.
HDFC, SBI Also Raised EBLR
We had recently reported that the mortgage lender HDFC Ltd raised its benchmark lending rate by 5 basis points on Sunday.
The release said that there is going to be no change in the lending for new borrowers. Depending on the credit and loan amount, the rates for new borrowers range between 6.70 percent and 7.15 percent.
Pushing the EMIs for the existing customers, SBI and other lenders raised benchmark lending rates last month.
In the coming months, as global inflationary fears have been stoked due to geopolitical tensions mainly due to the Russian invasion of Ukraine. This prompted the Reserve Bank earlier this month to raise the inflation target.