ICICI Bank hikes MCLR: How does it compare with other private banks?
Premium- The MCLR (Marginal Cost of Funds Based Lending Rate) has been raised by leading private sector lender ICICI Bank.
The MCLR (Marginal Cost of Funds Based Lending Rate) has been raised by leading private sector lender ICICI Bank. According to the bank's statement on June 1, 2022, and based on the revision, the bank's overnight and one-month MCLR sits at 7.30 per cent, three-month MCLR stands at 7.35 per cent, six-month MCLR stands at 7.50 per cent, and one-year MCLR is at 7.55 per cent. These rates reflect how a borrower's EMI would be affected. The Reserve Bank of India (RBI) on Wednesday hiked its key policy rate, the Repo rate — the rate at which it lends money to commercial banks by 50 basis points from 4.40 per cent to 4.90 per cent, implying that interest rates on loan products will rise even higher in the near future, making it difficult for borrowers to become debt-free sooner.
ICICI Bank also increased its external benchmark lending rate (EBLR) by 50 basis points (bps) to 8.60 per cent from 8.10 per cent, promptly after the Reserve Bank of India (RBI) raised the repo rate to 4.90 per cent. ICICI Bank's new EBLR rates are effective as of 8th June 2022. The bank has mentioned on its website that "ICICI Bank External Benchmark Lending Rate" (I-EBLR) is referenced to RBI Policy Repo Rate with a mark-up over Repo Rate. I-EBLR is 8.60% p.a.p.m. effective June 8, 2022."
We noticed that the ICICI Bank offers personal loans with interest rates ranging from 10.50 per cent to 19 per cent per annum, and auto loans with interest rates ranging from 7.35 per cent to 8.50 per cent for new cars and 10.50 per cent to 15.00 per cent for old cars. ICICI Bank Gold Loan interest rates range from 10% to 19.8%, and after the repo rate hike, all of these loan products may give you new interest rates with a 50 basis point increase shortly.
Yes Bank MCLR
Yes Bank's overnight MCLR is 7.10 per cent, its one-month MCLR is 7.55 per cent, its three-month MCLR is 7.70 per cent, its six-month MCLR is 8.50 per cent, and its one-year MCLR is 8.75 per cent as of June 1, 2022. Personal interest rates at Yes Bank now begin at 10.99 per cent, gold loan interest rates vary from 9.00 per cent to 15.00 per cent, and auto loan interest rates begin at 9.7 per cent per annum. Borrowers would have to pay higher EMIs on their existing loans after the bank raised its Marginal Cost of Funds Based Lending Rate (MCLR) across tenures by 15-25 basis points.
HDFC Bank MCLR
With effect from June 7, 2022, HDFC Bank increased its marginal cost of funds-based lending rate (MCLR) on loans of all tenures by 35 basis points. Previously, HDFC Bank increased the MCLR by 25 basis points on May 7, 2022. The overnight MCLR is now 7.50 per cent, up from 7.15 per cent earlier, according to the private lender's website. The one-month MCLR is 7.55 per cent, three-month and six-month MCLR are both 7.60% and 7.70%, one-year MCLR will now be 7.85 per cent, 7.95 per cent for two years MCLR, and 8.05 per cent for three years MCLR. As a result of this increase, housing, car, personal, and other loans would all become more pricey, and borrowers will have to pay higher EMIs on their outstanding loan amount.
IDFC First Bank MCLR
IDFC First Bank, a private sector lender, announced a change in MCLR on June 8, 2022. Following the revision, the bank's overnight and one-month MCLR is at 7.85 per cent, three-month MCLR stands at 8.05 per cent, six-month MCLR stands at 8.35 per cent, and one-year MCLR stands at 8.65 per cent. IDFC First Bank's personal loan interest rates begin at 10.49 per cent, house loan interest rates begin at 7.10 per cent for salaried persons and 7.50 per cent for self-employed individuals, and auto loan interest rates begin at 7.75 per cent.
By commenting on the repo rate hike Mr. Umesh Revankar, Vice Chairman & MD, Shriram Transport Finance has said “The RBI, largely on expected lines, hiked the repo rate by 50 bps with the MPC focussing on ‘withdrawal of accommodation’ to ensure inflation remains around the medium-term inflation target, while supporting growth. As the inflationary expectations have been rising, the RBI hiked the FY23 inflation forecast to 6.7%, but retained the FY23 GDP forecast at 7.2%. The rise in inflation is largely attributable to global crude oil prices and the geo-political environment. The RBI has been taking measures to tame excess system liquidity while the Government is managing inflation by reducing tax on petroleum products and restricting exports of essential commodities. We believe the regulator may not hikes rates very aggressively hereon, and will continue to monitor the evolving growth-inflation dynamics. While surplus system liquidity has come down, the RBI has said they will ensure adequate system liquidity for productive purposes. As a result, we do expect borrowing cost to go up gradually. It was heartening to see that RBI expects a pick-up in investment activity and an improvement in both urban and rural demand conditions. There continue to be some challenges, but we do expect to see a pick- up in new vehicle sales as investment activity and government capex spend in the economy while used vehicle demand continue to be robust."