Will your loans cost more post RBI rate hike?

suchithkc

The Reserve Bank of India today announced a hike in key policy rates in its bid to tame the raging inflation figures.

The central bank raised the repo rate, its main lending rate, by 25 basis points to 6.75% and raised the reverse repo rate, or borrowing rate, to 5.75 %. Repo is the rate at which banks borrow from RBI and reverse repo is the rate at which banks park their surplus money with RBI.

In the last one year RBI has raised rates eight times in small doses; the repo rate from 5% to 6.5% and reverse repo from 3.5% to 5.5%. With the rate of bank borrowing from the

RBI going up 0.25%, will it translate into a loan rate hike for commercial bank borrowers?

Experts say bankers are unlikely to hike their deposit or lending rates, as most banks had already raised their prime lending rates (PLRs) and deposit rates significantly in the last three months.

Also, the prevalent lending rates are high enough and another round of lending rate hike and borrowers would not be a position to absorb further rises.

Below is the existing loan rates by some leading banks

Central Bank of India 13.75%
Corporation Bank 13.60%
Dena Bank 14.50%
Dhanlaxmi Bank 17.25%
HDFC Bank 17.25%
ICICI Bank 17.50%
IDBI Bank 14.00%
Indian Bank 13. 75%
PNB 13.00%
SBI 13.00%
So, fear not, for the time being loan rates will continue to remain the same. Go ahead and buy that car.