New Delhi: After the Monetary Policy Committee (MPC) meeting, the Reserve Bank of India (RBI) has increased the repo rate by 0.50 percent. On Friday, Reserve Bank Governor Shaktikanta Das announced an increase in the repo rate by 0.50 percent, after which the repo rate has reached 5.40 percent. Its effect is seen only after one day. Private sector bank ICICI Bank has increased its lending interest rates. Along with this, the state bank Punjab National Bank (PNB) has also increased the interest rate for loans.
Increase in I-EBLR
ICICI Bank said in a notification that the External Benchmark Lending Rate (I-EBLR) has been aligned with the increased repo rate of the Reserve Bank. ICICI Bank said the I-EBLR has now been reduced to 9.10 per cent per annum or monthly. The new rate is effective from 5 August 2022. The state bank Punjab National Bank has increased the loan rate based on the repo rate. Due to which now the loan will be expensive. EBLR is the interest rate below which banks do not allow lending.
PNB hikes repo linked lending rate
Punjab National Bank has raised the external benchmark, Repo Linked Lending Rate (RLLR) to 7.90 percent. PNB has said in a regulatory filing that the repo linked lending rate has been increased from 7.40 percent to 7.90 percent following the hike in the repo rate by the Reserve Bank. The new rates will be applicable from 8 August 2022. On the other hand, ICICI Bank changed the MCLR even before the RBI announced the increase in the repo rate. Banks determine their lending rates based on the repo rate. Due to this change in repo rate has an impact on loan interest.
An attempt to control inflation
The Reserve Bank of India has increased the repo rate to curb inflation, with retail inflation consistently hovering above 7 percent. Reserve Bank Governor Shaktikanta Das said inflation is at record levels worldwide. India is facing high rate of inflation. June was the sixth consecutive month when retail inflation exceeded the Reserve Bank’s upper limit.