New Delhi: After the RBI increased the repo rate, several banks, such as Punjab National Bank, Indian Bank, UCO Bank, Bank of Baroda, Bank of India, Indian Overseas Bank, and Tamil Nadu Mercantile Bank, have raised their benchmark lending rates. This move will result in higher costs for home loans, car loans, and other types of loans.

 

The RBI implemented a 25 basis points repo rate hike on October 7th. As a consequence of this decision, it was anticipated that various banks, including public sector banks, private banks, and others, would adjust their loan interest rates. The repo rate was raised by the RBI from 5.25% to 5.50%.

 

The adjustment in interest rates was made to manage inflation. All six members of the RBI’s Monetary Policy Committee backed the decision to raise the repo rate. With retail inflation hitting 4.82 percent in August, the committee felt compelled to increase the repo rate due to the steady inflation rise, primarily fueled by elevated crude oil prices. In a similar move, the Federal Reserve in the United States raised interest rates by 25 basis points in September.

 

Punjab National Bank raised its repo-linked lending rate (RLLR) by 25 basis points to 8.10% on October 8th, adding a strategic premium of 0.35%. However, the bank maintained its margin cost of funds-based lending rate (MCLR) and base rate without changes.

 

Other banks also adjusted their interest rates. Indian Bank increased its repo-linked benchmark lending rate (RBLR) from 7.95% to 8.20%, while Bank of India raised its RBLR from 7.90% to 8.15%. Additionally, Bank of India lifted its repo-linked lending rate from 8.10% to 8.35%, increasing the repo rate component from 5.25% to 5.50%, while keeping the markup at 2.85%.

 

Indian Overseas Bank (IoB) and Tamil Nadu Mercantile Bank also raised their repo-based lending rates by 25 basis points to 8.35% and 8.50%, respectively, effective from October 8th. UCO Bank increased its repo-linked UCO Float Rate from 8.05% to 8.30%, as well as its UCO Prime rate from 5.25% to 5.50%, and its three-month TBLR from 5.25% to 5.30%.