Your loan’s EMIs should increase as lenders start raising interest rates
Monthly Loan Equivalent Payments (EMI) are set to rise as lenders started raising interest rates days after the Reserve Bank of India surprised with a hike in the repo rate and cash reserve ratio (CRR). ). The Reserve Bank of India on Wednesday raised the key rate – the repo rate – by 40 basis points to counter the rise in inflation which exceeded its tolerance level of 6% for the last three months until March.
In a bid to withdraw excess liquidity from the banking system, the RBI has also decided to increase the Cash Reserve Ratio (CRR) by 50 basis points to 4.5%. The CRR hike will result in the withdrawal of Rs 87,000 crore and will be effective from midnight on May 21, Governor Das said.
Mortgage lender HDFC Ltd on Saturday announced a 30 basis point (bps) increase in its benchmark lending rate, a move that will make loans more expensive for existing and new borrowers.
Revised rates for new borrowers at HDFC range between 7% and 7.45%, depending on credit and loan amount. The current range is 6.70% to 7.15%.
For existing customers, rates would increase by 30 basis points or (0.3%).
Earlier this month, HDFC raised its benchmark lending rate by 5 basis points, making EMI costly for existing borrowers.
The country’s main public lender, the Punjab National Bank, also raised its lending rates by 40 basis points. The bank raised its external benchmark linked lending rate by 0.40% to 6.90% with effect from June 1.
GNP has also increased savings deposit rates for various terms. For term deposits of less than Rs 2 crore, he raised interest rates to 5.10-5.15%. For single term deposits of Rs 2 crore and up to Rs 10 crore, customers will enjoy interest rates of between 3.50 and 4.05% per annum.
Several lenders including ICICI Bank, Bank of Baroda and Bank of India raised interest rates following the RBI’s surprise repo rate hike on Wednesday.
Meanwhile, a report from India Ratings suggested that an unexpected interest rate hike by the RBI on Wednesday would cause the banking system to make gains of 10 to 15 basis points on average on yields, private banks making larger gains as 57 percent of their lending is tied to the external benchmark rate and 40 percent to the marginal cost of lending rates.
(With PTI inputs)