ICICI, BoB, BoI and central bank revise lending rates after RBI repo rate hike


ICICI Bank revises its external benchmark interest rate to 8.1% and Bank of Baroda raises it to 6.9%.

ICICI Bank revises its external benchmark interest rate to 8.1% and Bank of Baroda raises it to 6.9%.

Private lender ICICI Bank revised its external reference rate (EBLR) to 8.1% and state-owned Bank of Baroda hiked the rate to 6.9% with immediate effect after the RBI hiked the key repo rate.

Likewise, two other public sector banks – the Bank of India and the Central Bank of India – also hiked their repo-linked lending rates.

In an out-of-order Monetary Committee (MPC) meeting on Wednesday, the Reserve Bank announced it would raise the benchmark repo rate – the rate it charges banks on short-term loans – by 0.40 percentage point to 4, with immediate effect. 4% increase. aims to tame rising inflation caused by the global geopolitical situation.

The RBI’s increase in the repo rate will push up borrowing costs for most personal, auto and home loans for customers since the loans were repo-rate linked after October 2019.

“The ICICI Bank external reference rate (I-EBLR) refers to the RBI policy repo rate plus a mark-up to the repo rate.

The EBLR moves up or down according to the movement of the repo rate.

The state-owned Bank of Baroda has also revised the lending rate linked to external benchmarks, effective May 5, 2022.

“For retail loans, effective May 5, 2022, the applicable BRLLR is 6.9% (current RBI repo rate: 4.4% plus 2.5% premium),” the Bank of Baroda said.

The BoB had introduced the Baroda Repo Linked Lending Rate (BRLLR) in relation to all retail lending products from October 2019.

The Bank of India announced that the RBLR (Repo Based Lending Rate) is 7.25% effective May 5, 2022 according to the revised repo rate (4.4%).

The Central Bank of India also revised the RBLR by 0.4 percentage points effective May 6.

The Central Bank of India’s revised RBLR will be 7.25% plus the credit risk premium (CRP) versus the existing rate of 6.85% plus CRP, the lender said.

The country’s largest lender, State Bank of India (SBI), calculates the EBLR at 6.65% plus the credit risk premium effective April 1, 2022.

EBLR is a sum of external reference interest rate (EBR) and credit risk premium (CRP). Last month, SBI increased its marginal cost-based lending rate (MCLR) by 10 basis points for all maturities.

With the revision, SBI’s one-year MCLR benchmark — against which most consumer credit is measured — rose to 7.1% per year.

In September 2019, the Reserve Bank had advised all banks to mandatorily peg the interest rate on all new adjustable-rate loans to retail or retail customers, as well as adjustable-rate loans to MSMEs, to an external benchmark (the repo rate) from October 1, 2019.

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