Banks raise interest rates by 50 points bps to 8.55%

Following the decision by the Reserve Bank of India to raise the repo rate by 50 basis points bps to 5.9 per cent on September 30, several banks including State SBI have increased its external benchmark-based EBLR by 50 bps to 8.55 per cent and its repo rate-linked by the same margin to 8.15 per cent, according to the bank's website. The hike will be applicable on and equated monthly instalment payments EMIs. Private sector giant has increased its EBLR to 9.25 per cent effective from September 30 and has also increased its marginal cost of funds-based MCLR following RBI's rate increase. The private bank MCLR for tenures has been revised to 7.85 -- 8.1 per cent, effective from October 1.

Starting October 1, 2019 all of the banks have made the transition to a regime in which interest rates are linked to an external benchmark.

The repo rate or yield on the treasury bills issued by the central government are also included in external benchmarks. The move was taken to spur better transmission of its interest-rate decisions.

The private lender has increased its MCLR, with its revised rates for overnight to one-year tenures now in a range of 8.2 -- 9.65 per cent, effective from October 1.

The repo rate for October 1 is 5.4 per cent. The spread framework is designed to add components. The rate applicable from October 1, 2022 onwards to the six month certificate of deposit rate is 6.79 per cent, said on its website.

State-owned lender has increased its MCLR. The overnight MCLR has been raised by 10 bps to 6.95 per cent. The one-year MCLR has been increased by 10 bps to 7.8 per cent, while the three-year MCLR has been raised by 20 bps to 8 per cent.

The private sector lending heavyweight HDFC has also raised interest rates on retail prime effective October 1. HDFC has increased rates by 50 bps in line with the rate hike announced by the Next Reset date. The increased rates will reflect on monthly EMIs for borrowers.

On September 9, bank credit growth was 16.2 per cent year-on-year, a nine-year high. Deposit growth fell behind at 9.5 per cent over the same period.