HDFC Bank, the largest private sector lender in the country, has increased its marginal cost of funds-based lending rate MCLR by 5 10 basis points bps across loan tenors, with effect from August 8. The six-member MPC hiked the benchmark by another 50 bps to 5.40 per cent last week, and the interest rate hike came after the benchmark was hiked by another 50 bps to 5.40 per cent.
The overnight and one-month HDFC Bank is now 7.80 per cent, the 3 month is 7.85 per cent, the 6 months are 7.95 per cent, the 1 year is 8.10 per cent, the 2 year is 8.20 per cent and the 3 year is 8.30 per cent.
A private sector lender IDFC First Bank has also revised its upwards by 5 -- 15 bps across loan tenors, effective August 8. Its overnight and one-month MCLR now stand at 8 per cent, 3 months at 8.25 per cent, 6 months at 8.60 per cent and 1 year at 8.95 per cent.
The public sector lender Canara Bank hiked its MCLR by 5 -- 15 bps across loan tenors last week, taking its overnight and one-month MCLR to 6.80 per cent. The three month MCLR now stands at 7.10 per cent, six months at 7.60 per cent and one year at 7.65 per cent.
Following the rate hike by the MPC last week, most lenders have already hiked their external benchmark-linked loan rates. ICICI Bank, Punjab National Bank, and Bank of Baroda raised their external benchmark linked loan rates by 50 bps over the weekend. The ICICI Bank's external benchmark lending rate is now 9.10 per cent, while Bank of Baroda's repo-linked lending rate has been revised upwards to 7.95 per cent, reflecting a spread of 2.55 per cent over the RBL Bank. It has also revised its repo-linked lending rate by 50 bps to 10.50 per cent.
The latest data from the RBI shows that 43.6 per cent of the banking system is linked to the external benchmark, which could be the yields on government securities such as 91 day and 182 day Treasury Bills. Some 49.2 per cent of the banking system's loans are linked to the MCLR.
The repo rate was raised last week to a three-year high of 5.40 per cent owing to inflation concerns and to protect the exchange rate, which has come under pressure since the war broke out in Europe in February.
This is the third consecutive rate hike by the MPC since May. The RBI has increased its repo rate by 140 basis points cumulatively since it started the process of monetary tightening to tame inflation, which has been above the RBI's upper tolerance limit for quite some time now.