Banks Begin Raising Lending Rates After RBI Hikes Repo Rate By 25 Basis Points
New Delhi, Oct 7: Hours after RBI raised its benchmark policy rate, large banks such as Punjab National Bank, Indian Bank and Bank of Baroda announced an increase in their lending rates, making loans expensive for borrowers. The Reserve Bank of India raised its benchmark interest rate by 25 basis points to 5.50 per cent on Wednesday, its first increase in nearly four years, and signalled that…
New Delhi, October 7 saw large banks like Punjab National Bank, Indian Bank, and Bank of Baroda raise their lending rates following the Reserve Bank of India's (RBI) decision to hike the benchmark policy rate by 25 basis points. The RBI raised its key interest rate to 5.50% on Wednesday, marking its first increase in nearly four years and indicating potential further hikes as the country grapples with rising inflation and a weakening currency.
The Monetary Policy Committee voted unanimously for the increase, with the move aimed at curbing inflation and maintaining economic stability. While the decision was anticipated, the central bank surprised markets by announcing a calibrated tightening approach, signaling that rate cuts are unlikely in the short term. Punjab National Bank increased its lending rates by 0.25% to 8.35%, effective October 8, while Indian Bank raised its rates to 8.20%, also taking effect on the same day.
Bank of Baroda and Bank of India followed suit, raising their rates to 8.15% and 8.35%, respectively. Private sector lenders, such as Tamilnad Mercantile Bank, also increased their rates to 8.5%, reflecting the broader policy shift in lending costs.
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