RBI and Repo Rate and Bank Rate – Loan

First time in Modi’s regime, RBI has increased the Repo rate by 25 basis points which is now 6.25. Since 2014, till the recent Budget 2018, RBI either reduced the repo rate or maintained status quo. Let us know more details about how the Repo rate, home loan, personal loan interest rates are interlinked.

What is Repo Rate?

Repo rate is the rate at which the RBI lends money to the banks. As we pay interest to the bank s when we take loan, the same way the banks pay interest to the RBI when the banks take loan. So, that interest rate at which the banks pay to the RBI is called Repo rate.

Impact of Repo rate hike on banks and banks rates.

So, the repo rate increase means, the banks need to pay more interest to the RBI. So, for the banks it is time to increase the revenue. The source of revenue to banks is Public. So, banks calculate their earnings, profits and then increase their source of income from lending (home loan, personal loan, etc) by increasing the lending rates.

Repo rate hike and the Banks Home loan, auto and other personal loan interest rate hike – 

Earlier this week, some banks, including the State Bank of India (SBI), Punjab National Bank (PNB), HDFC and ICICI Bank increased their benchmark lending rates or MCLR by up to 10 basis points per cent, making loans costlier for consumers.

SBI chairman Rajnish Kumar said that it was good that the rate hike has been done with now. He does not anticipate further rate hikes this year unless global oil prices rise. “This is the time that they could have done the rate hike “ he told The Indian Express.

Every time there is a repo rate cut, SBI is the first bank to pass on the benefits to the customers by reducing the lending rates. Which is followed by other major banks like ICICI and HDFC.

This is the first time we have seen these major banks increasing the lending rates before the increase in the RBI repo rate. Hence, it is anticipated that within near period, there will not be any increase in the lending rates by the major banks like SBI, ICICI, HDFC, AXIS Bank.

The home loan interest rates were never below 9% before 2014. In the near recent times, the home loan interest rates have reached to the maximum of 8.7%.

So, it is still advantageous, for all those who want to buy home, go for home loans and get the best one that suits you better. As, though the repo rate has increased, the lending rates remain the same, atleast for a while.

Hurry and fix your loan, home, auto or any other personal loan at the best interest rates ever. Do your research with Loanyantra.com., know the interest rate trends, and the market trend. Get the best fit loan from your favourite lender. All you need to do is just give a missed call to 040-71011991. Our relationship manager calls you and you can discuss in detail and get the best product with low interest rate.

 

SBI increases lending rates

The State Bank of India (SBI), India’s largest PSU bank, on Thursday, raised lending rates from 7.95 percent to 8.15 percent. SBI increases lending rates for the first time since April 2016. SBI is the first one to implement the MCLR based calculation for loan interest rates when MCLR is introduced an year ago.

There is no change in RBI policies since two quarters. But, it is observed that SBI increases lending rates. Liquidity tightening, rise in bond yield, credit demand pick up and other profitability issues are pushing the banks to up the interest rates

Just a day after SBI increases interest rates on fixed deposits, SBI increases lending rates. SBI term deposits for 7 to 45 days will earn an annual interest rate of 5.75 per cent, up from 5.25 per cent earlier. For one year deposits, SBI customers will now earn 6.40 per cent from 6.25 per cent earlier, while those deposits maturing between two years and 10 years will earn 6.50 per cent, compared with 6 per cent earlier. For senior citizens, the revised interest rates are 7 per cent on their deposits, up from earlier 6.50 per cent.

Another state-run bank PNB also raised its lending rate, effective March 1, 2018. PNB raised its one-year MCLR rate to 8.30 per cent from 8.15 per cent.

SBI increases lending rates
SBI increases lending rates – EMIs to go up

Many banks have been increasing their deposit and lending rates since the last quarter. While lending rates have been jacked up on an average of 5-10 bps by private sector lenders like HDFC Bank, Axis Bank, Kotak Mahindra Bank and Yes Bank since January, almost all the state-run lenders have been increasing their bulk deposit rates in the range of 15 bps to 125 bps.

SBI’s new marginal cost of funds-based lending rates with effect from March 1, 2018, as shared by the bank on its website – sbi.co.in:

Tenor Existing MCLR (In %) Revised MCLR (In %)
Overnight 7.7 7.8
One month 7.8 7.8
Three months 7.85 7.85
Six months 7.9 8
One year 7.95 8.15
Two years 8.05 8.25
Three years 8.1 8.35

What loanyantra does for you while SBI increases lending rates – 

Get the loan from best of banks. Know every bank’s lending rates and choose your favourite one. Be the first one to know about every lender in the banking sector. Our dedicated Customer Relationship Manager will help you through every step while you choose home loan for your dream home.