Loan EMIs: Here are some banks that have already hiked interest rates

Prominent banks like the Punjab National Bank, ICICI Bank and HDFC Bank have upped their lending rates which will make loans costlier. These include home loans, loans against property, vehicle loans and personal loans too.

The rates effective from June 01, 2022, will now put prospective customers in a tight spot as they would now have to deal with costly loans. 

The leading private-sector lender HDFC Ltd issued a statement, “HDFC increases its retail prime lending rate (RPLR) on housing loans, on which its adjustable rate home loans (ARHL) are benchmarked, by 5 basis points, with effect from June 1, 2022.” The increase in basis points (bps) means that loans up to ₹30 lakh will now have an interest rate of 7.15 per cent. However, a 7.4 per cent interest rate would be charged on the loans between ₹30 lakh and ₹75 lakh while those above ₹75 lakh must be repaid at 7.5 per cent.

Leading public sector bank, the State Bank of India (SBI) also raised its home loan interest rate to 7.05 per cent. As per the SBI website, the new rate would be effective from the first day of June this year. 

The increase in interest rates means that customers will now have to pay higher equated monthly instalments (EMIs) on the loans that they seek, be it home loans, vehicle loans or personal loans. Home loans and loans against property would be marked by a sharper increase in their EMIs. This may cause borrowers to seek tenor extensions.

Before this, the Indian Overseas Bank had changed its lending rate to 7.25 per cent from May 10 this year. In a regulatory filing, the bank issued the statement saying, "Our bank has revised the Repo Linked Lending Rate (RLLR) to 7.25 per cent (ie 4.40 per cent 2.85 per cent = 7.25 per cent) with effect from May 10, 2022."

State-owned Bank of Baroda also announced an increase in the lending rate by up to 0.1 per cent from May 12 this year. Before this, Canara Bank, Bank of Maharashtra and Karur Vysya Bank had also upped their lending rates based on the marginal cost of funds based lending rate (MCLR) and repo rate.

This is not the first round of increases by these banks. Before this, many banks including major public and private sector banks with the small finance banks following suit had revised their interest rates after the monetary policy committee hiked the repo rate by 40 basis points (bps) on May 4 this year. 

A higher repo rate means that commercial banks would have to shell out more interest for the money they borrow from the Reserve Bank of India (RBI). The RBI heightens the repo rate to control inflation.  

The Reserve Bank of India (RBI) assesses and modifies the interest rates at least once every three months based on external benchmark rates. The modification of external benchmark rates causes EMI rates to fluctuate at an increased frequency.