Loans To Get Expensive As ICICI Bank, Indian Bank Hike Lending Rates

ICICI Bank, the second-largest private sector lender and state-owned Indian Bank on Monday raised their lending rates across all tenors in anticipation of a rate hike by the RBI later this week.

The rates have been increased across all tenors under the marginal cost of funds-based lending rate (MCLR) system, a move that will make EMIs expensive for those who availed loans benchmarked against the MCLR.

Under the revised rates, effective August 1, ICICI Bank's one-year MCLR has increased by 15 basis points or 0.15 per cent to 7.90 per cent, while the overnight MCLR rose to 7.65 per cent, as per information posted on the bank's website.

The one-year MCLR is considered important from a retail loans perspective, as a bank's long-term loans like home loans are linked to this rate.

The rate hike comes ahead of the RBI's Monetary Policy Committee (MPC) meeting later this week. It is widely expected that the MPC would hike interest rates to tame high inflation.

Later in the day, state-owned Indian Bank announced a revision in its one-year MCLR to 7.65 per cent, up by 0.10 per cent from the existing rate.

The other tenor MCLRs, from overnight to 6-months, have been revised upwards to 6.85 - 7.50 per cent, Indian Bank said.

It also revised the TBLR (Treasury Bill Benchmark Linked Lending Rate) of more than 1 year to less than or equal to 3 years tenor to 6.15 per cent from 6.10 per cent, among others.

It said the revised MCLR and TBLR will be effective from August 3.

"Other existing benchmark rates viz, policy repo rate, RBLR, base rate and BPLR remain unchanged," it added.

Last week, mortgage lender HDFC increased its lending rate by 0.25 per cent.

Indiabulls Housing Finance Ltd (IBHFL) also hiked its reference rates on housing and MSME loans by 25 basis points in line with other players.

The new rates will be applicable for new customers from August 1 and for existing borrowers from August 5. 

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