New Delhi, Pretr. Banks and financial institutions have started increasing interest rates after the RBI raised the repo rate by 50 basis points on Wednesday. This has made home, auto and personal loans costlier. After the increase in the repo rate, ICICI Bank, Bank of Baroda, PNB, Bank of India, Indian Bank, Indian Overseas Bank and HDFC Ltd have increased the loan rates. Explain that the repo rate is called the rate at which RBI gives loans to banks to meet their short-term requirements.

Private sector ICICI Bank has increased the repo-based external benchmark lending rate by 50 basis points to 8.60 per cent from 8.10 per cent. PNB has increased the repo based lending rate from 6.90 per cent to 7.40 per cent and Bank of Baroda has also increased it to 7.40 per cent. HDFC Ltd has increased the home loan rates by 0.50 percent. Due to this, Rs 31 more per lakh will have to be paid on the loan of 20 years. SBI has increased the external benchmark lending rate to 7.05 per cent even before the hike in the repo rate. Credit risk premium is also included with this rate.

Indian Bank has increased the interest rate to 7.75 percent and Indian Overseas Bank to 7.75 percent. Bank of Maharashtra has increased the loan rates from 7.20 percent to 7.70 percent.

Not getting profit on deposit

After a hike in the repo rate, banks raise the loan rates immediately but do not increase the rate of deposits quickly. Experts say that banks do this for maximum profit. Sometimes the interest rates on deposits are increased below the prescribed limit.

RBI increased repo rate twice in two months

The RBI had hiked the repo rate by 40 basis points by holding a contingency meeting in May. After this, in the meeting of the Monetary Policy Committee (MPC) that ended on June 8, it was decided to increase the repo rate by 50 basis points. Thus, in the last two months, the RBI has increased the repo rate by 90 basis points.

Edited By: Sarveshwar Pathak