State banks lift repo-linked loan rates by 25 basis points after RBI hike
Following the RBI’s 25-bp increase in the policy repo rate to 5.5%, several state-owned banks raised their repo-linked lending rates by the same margin, making new and existing benchmark-linked loans more expensive.
On the day the RBI’s six-member Monetary Policy Committee increased the policy repo rate by 25 basis points to 5.5%, a group of state-owned lenders responded by raising their repo-linked lending rates by an identical 25-bp spread. Bank of Baroda set its Baroda Repo Based Lending Rate at 8.15%, Punjab National Bank moved to 8.35%, and Indian Bank adjusted to 8.20%, with similar moves by Indian Overseas Bank, Bank of India and RBL Bank.
UCO Bank also revised several benchmark-linked rates, including its three-month BLR to 5.30% and its 12-month Treasury Bill Linked Rate to 5.95%. The adjustments mean that both new and existing loans tied to external benchmarks will cost borrowers more, while the pass-through to deposit rates is likely to be slower, except for fresh deposits that may rise as short-term market rates climb. RBI Governor Sanjay Malhotra signaled that rate cuts are off the table in the near term, indicating a calibrated tightening stance.
Why it matters
Higher loan rates increase borrowing costs for businesses and consumers, affecting credit growth and the broader Indian economy.
How this story developed
- Sep 22 How first-time buyers can protect mortgage rates before an offer is accepted
- Oct 6 Nationwide launched a reservation product that can lock a quoted mortgage rate for up to 90 days after a decision in principle.
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