Taken home, car loan? Your EMIs could soon increase as 2 big banks hike lending rates, check details

New Delhi: ICICI Bank and Bank of Baroda (BoB) have increased the external benchmark lending rate (I-EBLR) by 40 bps. With the latest revision, ICICI Bank’s I-EBLR now stands at 8.10%. On the other hand, the Bank of Baroda has hiked the repo-linked lending rate by 40 bps to 6.90%. 

For the unversed, EBLR is the lending rate decided by the lenders after taking into consideration external benchmarks such as repo rate, reverse repo rate, and other factors. In simple terms, EBLR is the minimum rate of interest at which borrowers can take money from the banks. 

ICICI Bank and Bank of Baroda have increased EBLR after the Reserve Bank of India (RBI) increased the Repo Rate early this week. The RBI had increased the repo rate by 40 bps to 4.40% on Wednesday (May 4, 2022), in a first unscheduled hike in the benchmark lending rate.  

“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 8.10 per cent p.a.p.m. effective May 4, 2022," the private lender’s site read. 

How Borrowers Will Get Impacted? 

A change in benchmark lending rates pushes banks to tweak their interest rates on home, car, and other loans. As the RBI has increased repo rate, lenders are now increasing repo-linked interest rates, meaning that borrowers could soon have to pay higher EMIs against their home, car or other loans. Also Read: Canara Bank Q4 net profit more than doubles to Rs 1,666 crore

The RBI’s decision to increase the repo rate can be seen as a major effort to tame the rising inflation. As of now, ICICI Bank and Bank of Baroda have increased their lending rates. However, it is expected that other major public and private lenders could soon increase the interest rates for home, auto and other types of loans. Also Read: Airtel launches 2 prepaid plans with free Disney+ Hotstar subscription: Check tariff, other benefits