Quick Telecast
Expect News First

Banks increase EBLRs by 190 bps in tandem with RBI’s repo rate hike

0 42


The Reserve Bank of India
| Photo Credit: REUTERS

All major banks have increased their external benchmark-based lending rates (EBLRs) by 190 basis points in tandem with the hike in the Reserve Bank’s policy repo rate since May this year, though they have been slow in raising the deposit rates.

The Reserve Bank of India (RBI) has hiked the key short-term lending rate (repo) by 190 basis points in four tranches since May to contain inflation.

The RBI’s Monetary Policy Committee (MPC), which makes recommendations to the central bank regarding interest rates, is set to meet again early next month amid expectations of another repo rate hike.

By October-end 2022, banks have increased their EBLRs by 190 bps in tandem with the increase in the policy repo rate since May 2022, according to an RBI article.

Further, banks have also increased their 1-year median marginal cost of funds-based lending rate (MCLR) by 85 bps from May to October 2022.

From October 1, 2019, all banks have to lend only at an interest rate linked to an external benchmark, such as RBI’s repo rate or Treasury Bill yield. As a result, monetary policy transmission by banks has gained traction.

However, the banks have raised the interest rates on term deposits by a much lower margin.

The median term deposit rates (average card rates on retail deposits) on fresh deposits increased by 48 bps from May to October 2022. Banks have increased their bulk deposit rates higher than retail deposit rates.

Across bank groups, the article said, transmission to lending and deposit rates of private sector banks (PVBs) has exceeded that of public sector banks (PSBs) in the current tightening period.

Credit growth for PVBs has been higher than for PSBs in the current interest rate tightening period beginning May this year.

In view of the increase in credit demand, private banks have increased their lending and deposit rates to maintain higher net interest margins (NIMs). The next meeting of the MPC is scheduled during December 5-7, 2022. 


The Reserve Bank of India

The Reserve Bank of India
| Photo Credit: REUTERS

All major banks have increased their external benchmark-based lending rates (EBLRs) by 190 basis points in tandem with the hike in the Reserve Bank’s policy repo rate since May this year, though they have been slow in raising the deposit rates.

The Reserve Bank of India (RBI) has hiked the key short-term lending rate (repo) by 190 basis points in four tranches since May to contain inflation.

The RBI’s Monetary Policy Committee (MPC), which makes recommendations to the central bank regarding interest rates, is set to meet again early next month amid expectations of another repo rate hike.

By October-end 2022, banks have increased their EBLRs by 190 bps in tandem with the increase in the policy repo rate since May 2022, according to an RBI article.

Further, banks have also increased their 1-year median marginal cost of funds-based lending rate (MCLR) by 85 bps from May to October 2022.

From October 1, 2019, all banks have to lend only at an interest rate linked to an external benchmark, such as RBI’s repo rate or Treasury Bill yield. As a result, monetary policy transmission by banks has gained traction.

However, the banks have raised the interest rates on term deposits by a much lower margin.

The median term deposit rates (average card rates on retail deposits) on fresh deposits increased by 48 bps from May to October 2022. Banks have increased their bulk deposit rates higher than retail deposit rates.

Across bank groups, the article said, transmission to lending and deposit rates of private sector banks (PVBs) has exceeded that of public sector banks (PSBs) in the current tightening period.

Credit growth for PVBs has been higher than for PSBs in the current interest rate tightening period beginning May this year.

In view of the increase in credit demand, private banks have increased their lending and deposit rates to maintain higher net interest margins (NIMs). The next meeting of the MPC is scheduled during December 5-7, 2022. 

FOLLOW US ON GOOGLE NEWS

Read original article here

Denial of responsibility! Quick Telecast is an automatic aggregator of the all world’s media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials, please contact us by email – [email protected]. The content will be deleted within 24 hours.

Leave a comment
buy kamagra buy kamagra online
Ads Blocker Image Powered by Code Help Pro

Ads Blocker Detected!!!

We have detected that you are using extensions to block ads. Please support us by disabling these ads blocker.

Powered By
Best Wordpress Adblock Detecting Plugin | CHP Adblock