RBI Rate Hike Pushes Several Banks to Raise Lending Rates
Several Indian banks have increased their benchmark lending rates following the Reserve Bank of India’s (RBI) decision to raise the repo rate by 25 basis points to 5.50%. The rate increase, announced on October 7, marks the RBI’s first repo-rate hike in nearly four years and was accompanied by a shift in its monetary policy stance towards “calibrated tightening.”
Punjab National Bank (PNB) raised its Repo Linked Lending Rate (RLLR) from 8.10% to 8.35%, effective October 8, while keeping its MCLR and Base Rate unchanged. Indian Bank increased its Repo Linked Benchmark Lending Rate from 7.95% to 8.20%. Bank of Baroda raised its Repo Based Lending Rate from 7.90% to 8.15%.
Bank of India and Indian Overseas Bank also raised their repo-linked rates to 8.35%, while Tamilnad Mercantile Bank increased its RLLR from 8.25% to 8.50%.
The revisions could increase borrowing costs for customers whose loans are linked to external benchmarks, particularly floating-rate borrowers. Other lenders are expected to review their benchmark rates following the RBI’s policy shift.
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