icici bank: HDFC, ICICI Bank, PNB increase lending rates

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MUMBAI: Interest rates on loans are on the rise again. The country’s largest housing finance company HDFC hiked its benchmark rates by 5 basis points (100bps = 1 percentage point), while ICICI Bank revised its marginal cost of lending rate (MCLR) by 30bps. The increase in interest rates are effective from June 1.
HDFC’s rate revision comes close on the heels of a 30bps increase in its retail prime lending rate, which followed a 40bps hike in the RBI’s policy rate in May. Following the increase in the benchmark, the revised rate for new borrowers will be between 7. 05% and 7. 50%, depending on credit score and loan amount. The existing range is 7-7. 45%.
For banks, home loans are linked to the repo rate and the 40bps hike will be transferred to borrowers. However, in the case of older loans, the rates are linked to the MCLRs, which are reviewed every month.
ICICI Bank has increased its MCLR by 30bps across the board following an increase in the cost of funds consequent to the withdrawal of liquidity by the central bank. Af- ter the increase, ICICI Bank’s one-year MCLR stands at 7. 55%.
Punjab National Bank has also hiked its MCLR rates by 15bps, which will increase the outgo for borrowers with older loans.
Most banks review their cost of funds during the first week of the month. Given the increase in cost of funds, more such announcements are likely soon.
According to bankers, the current increase in rate will not impact demand as rates are still below the prepandemic level. However, the RBI is expected to once again increase rates when it reviews its policy rate next week. RBI governor Shaktikanta Das had earlier said that expectations of a rate increase were a “no brainer”.







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