New Delhi: Ahead of RBI’s monetary policy review, at least six banks, including, SBI, PNB and ICICI Bank, have raised their benchmark lending rates or MCLR by upto 0.2 per cent, which translates into costlier home and auto loans for consumers.
Apart from these three major banks, others who have raised their lending rates are: HDFC Ltd, Union Bank and Kotak Mahindra Bank. MCLR is the minimum lending interest rate, below which financing institutions and banks cannot give loans.
With the latest hike, SBI’s one-year MCLR stands at 8.25%, up 0.10% from 8.15% earlier. HDFC has increased its retail prime lending rate (PLR) by 10bps, while ICICI also hiked its one-year MCLR by 10bps to 8.40%. After this hike, HDFC’s home loans start at 8.5%.
PNB has hiked one-year MCLR to 8.4% from 8.3% earlier. Union Bank increased rates by 10bps to 8.45%. But Kotak Bank has increased its one-year MCLR by a sharp 20bps to 8.9%.
Most home loans, car loans and other personal loans are linked to one-year MCLR and the EMIs across loans are likely to go up, pinching the existing and new borrowers.
How it will affect your EMIs
Going by simple calculations, the EMI on a Rs 30-lakh housing loan taken for a period of 20 years will increase by about Rs 200 per month (which is Rs 2,400 annually), assuming that the current rate of interest is 8.15 per cent, which goes up to 8.25 per cent after the increase in the lending rates.
MPC may increase key rates
Skyrocketing fuel prices and rising inflation may force the Reserve Bank’s rate setting panel, MPC, to increase key rates at its three-day meet from June 4. The monetary policy review will take into account the retail inflation which rose to a 4-month high of 3.18 per cent in April mainly on account of increasing prices of petrol and diesel. RBI mainly factors in retail inflation, based on the Consumer Price Index (CPI), while deciding the key interest rate. The domestic retail petrol and diesel prices are at all time high on account of rise in crude oil prices in international market.