RBI Policy: How Will Another Repo Rate Increase Affect Your Lending Issuance?
You should check the personal loan interest rates offered by several NBFCs and banks before applying for a personal loan from a particular bank. However, when deciding to get a personal loan or home loan, many people turn to the bank where they have their main account. If you compare interest rates from different banks, you may find that another bank makes personal and home loans at a much lower rate.
The Reserve Bank of India (RBI) raised the repo rate by 40 basis points to 4.40 percent on May 4, from 4 percent previously. A basis point is one hundredth of a percentage point. The repo rate was lowered in May 2020 and remained stable until the recent hike. In addition, the cash reserve ratio (CRR) was increased by 50 basis points, which put further upward pressure on interest rates. Since the hike went into effect immediately, borrowers could expect higher PMIs, while FD investors should expect higher yields on new FDs.
Meanwhile, the RBI could hike the repo rate by 50 basis points and raise the cash reserve ratio (CRR) during its meeting this week to control inflation, according to a Mint poll of analysts. The Central Bank’s Monetary Policy Committee (MPC) will meet on June 6-8.
According to five in 10 economists polled by Mint, MPC is expected to raise the repo rate to 4.9% from 4.4%, while the rest expect a 35-40 basis point hike to 4.75%-4.8%. Half of the respondents forecast a 25 to 50 basis point increase in the CRR, or the percentage of deposits banks are required to hold as reserves with the RBI.
Also, as retail inflation hit 7.79 percent in April, the government has announced several measures to contain prices of essential goods by banning or restricting exports of wheat, sugar and iron ore. Therefore, the majority of economists expect the Monetary Policy Committee to revise its inflation forecast upwards.
The EMI for fixed rate loans, like auto and personal loans, stays the same throughout the life of the loan. Therefore, the timing of your loan application is crucial. If you take out a loan at a low interest rate, you can get that interest rate for the entire term of the loan, even if the general interest rate increases.
On the other hand, the timing of the loan is less critical for home borrowers, as they typically borrow at variable rates. The rate hike may not have a material impact on the interest payout and PMI payments. Therefore, even if you get in now at a cheaper rate, you will be charged a higher rate later if the lender increases their rates.
You don’t have to worry about the repo rate if you have an existing fixed rate loan. However, if you have variable interest rates on an existing loan or plan to take out a loan — at fixed or variable rates — you may have to pay a higher interest rate if the RBI continues to raise the repo rate.
Present personal loan rates at different banks
| Bank | Interest rate (pa) | handling fee |
| Aditya Birla capital | 14% pa -26% pa | up to 2% |
| axis bench | 12% pa – 21% pa | At the bank’s discretion |
| Bank of Baroda | 10.50% pa – 12.50% pa | up to 2% |
| Bank of India | 10.35% pa – 12.35% pa | up to 2% |
| Bank of Maharashtra | 9.45% pa – 12.80% pa | up to 1% |
| Central Bank of India | 9.85% and more | up to 1% |
| citibank | 9.99% pa – 16.49% pa | up to 3% |
| City Union Bank | 12.75% pa | 1.00% subject to a minimum of Rs.250 |
| Federal Bank | 10.49% pa – 17.99% pa | up to 3% |
| Fullerton India | 11.99% pa – 36% pa | up to 6% |
| HDFC bank | 10.5% pa – 21.00% pa | Up to 2.50% |
| home loan cash loan | 19% pa – 49% pa | 0%-5% |
| HSBC bank | 9.50% pa – 15.25% pa | up to 1% |
| IDBI bank | 8.15% pa – 10.90% pa | Contact the bank |
| IDFC First Bank | 10.49% pa upwards | Up to 3.5% |
| IIFL | 24% pa | 2% up |
| Indian Foreign Bank | 9.30% pa – 10.80% pa | Up to 0.50% |
| IndustryInd Bank | 10.49% pa – 31.50% pa | 3% up |
| J&K Bank | 10.80% pa | Up to Rs.500 |
| Karnataka Bank | 12% pa – 17% pa | Maximum 8,500 rupees |
| Karur Vysya Bank | 9.40% pa – 19.00% pa | 0.30% up |
| Kotak Mahindra Bank | 10.25% and more | Up to 2.5% |
| Punjab National Bank | 7.90% pa upwards | Up to 1.00% |
| RBL bank | 14% pa – 23% pa | Up to 3.5% |
| South Indian Bank | 10.60% pa – 18.10% pa | up to 2% |
| State Bank of India | 9.60% pa – 15.65% pa | Up to 1.50% |
| Tata Capital | 10.99% up | Up to 2.75% |
| TurboLoan Powered by Chola | 15% – 21% (fixed) pa | 3.00% |
| Ujjivan Small Finance Bank | 11.49% pa – 16.49% pa | At the bank’s discretion |
| yes bank | 10.99% pa upwards – 16.99% pa | At Bank’s discretion Up to 2.50% |
Source: BankBazaar
Present home loan rates from different banks
| Aava’s financiers | 8.00% | 1.00% |
| Aditya Birla | 9.00% | 1% |
| axis bench | 6.90% | Rs.10,000 |
| Bandhan bench | 6.40%-13.50% | 1% (Rs.5,000) |
| Bank of Baroda | 6.90% to 8.25% | Contact the bank for information |
| Bank of India | 6.90% | – |
| Bank of Maharashtra | 6.80% | Rs.10,000 |
| Canara bench | 7.05% pa to 9.30% pa | 0.50% of the loan amount with a minimum of Rs. 1,500 and a maximum of Rs. 10,000 |
| Central Bank of India | 6.85% | Rs. 20,000 |
| citibank | 6.75% | Rs.10,000 |
| DBS bank | 7.30% | 0.25% (Rs. 10,000) |
| Dhanlaxmi Bank | 7.85% | Rs.10,000 |
| DHFL housing finance | 8.75% | Rs. 2500 |
| Federal Bank | 7.65% | Rs. 3,000 – Rs. 7,500 |
| GIC housing finance | 7.45% | Rs. 2,500 |
| HDFC LTD | 7.00%* | Rs. 3,000 – Rs. 5,000 (plus tax)* |
| HSBC bank | 6.45% | 1% (Rs. 10,000) |
| Hudco Home Loans | 9.45% | N / A |
| IDBI bank | 6.75% | 0.50% (Rs. 2,500 – Rs. 5,000) |
| IDFC First Bank | 6.50% | Rs.5,000 – Rs.5,000 |
| IIFL | 10.50% | 1.25% |
| India Shelter Finance | 12.00% | 2.00% |
| india bulls | 7.60% | 0.50% up |
| Indian Foreign Bank | 7.05% | 0.50% (max. Rs. 20,000) |
| Jammu and Kashmir bank | 7.20% | Rs.500 – Rs.10,000 |
| Karnataka Bank | 7.50% | Rs. 250 |
| Karur Vysya Bank | 7.20% | Rs.5,000 |
| Kotak Mahindra Bank | 7.00% pa to 7.60% pa | 0.50% |
| LIC housing finance | 6.90% | Rs. 10,000-Rs. 15,000 |
| PNB housing finance | 6.99% | Up to 0.50% |
| Punjab and Sind Bank | 6.85% | Total Waiver |
| Punjab National Bank | 6.50% | 0.35% (max. Rs. 15,000) |
| Reliance Home Finance | 9.75% | Rs.3,000 – Rs.6,500 |
| Saraswat Bank Home Loans | 6.70% | zero |
| Shriram case | 8.90% | N / A |
| South Indian Bank | 7.85% | 0.50% (Rs. 5,000 – Rs. 10,000) |
| Standard Chartered Bank | 7.99% | 1% |
| State Bank of India | 7.05% pa -10.85% pa | 0.35% up |
| Sundaram home financing | 6.95% | Rs.3,000 (for employees) |
| Tamilnad Mercantile Bank | 8.25% | Rs. 15,000 |
| Tata Capital | 6.90% | 0.50% |
| UCO bench | 6.50% | 0.15% (Rs. 1,500 – Rs. 15,000) |
| Union Bank of India | 6.90% | – |
| United Bank of India | 8.00% | 0.59% (Rs. 1,180 – Rs. 11,800) |
| yes bank | 8.95% | 1% (Rs. 10,000) |
Source: BankBazaar