After the meeting of the Monetary Policy Committee (MPC meeting), the Reserve Bank of India increased the repo rate by 0.50 percent. Its effect is visible only after a day. Private sector bank ICICI Bank has increased the interest rate of lending.

Along with this, the state-owned bank Punjab National Bank (PNB) has also increased the interest rate for lending. On Friday, Reserve Bank Governor Shaktikanta Das announced an increase in the repo rate by 0.50 percent, after which the repo rate reached 5.40 percent.

Increase in I-EBLR

ICICI Bank said in a notification that the External Benchmark Lending Rate (I-EBLR) has been made in line with the increased repo rate of the Reserve Bank. ICICI Bank said that I-EBLR has now been reduced to 9.10 percent annually or monthly.

The new rate has become effective from 5 August 2022. Government bank Punjab National Bank has increased the loan rate related to the repo rate. Because of this, now loans will become expensive. EBLR is the interest rate below which banks do not allow lending.

PNB hikes repo-linked lending rate

Punjab National Bank has reduced the external benchmark, Repo Linked Lending Rate (RLLR) to 7.90 percent. PNB said in a regulatory filing that after the increase in the repo rate by the Reserve Bank, the repo-linked lending rate has increased from 7.40 percent to 7.90 percent. The new rates will be effective from 8 August 2022.

Earlier this month, ICICI Bank had changed the MCLR before the RBI announced a hike in the repo rate. Banks keep their lending rates related to the repo rate. Because of this, the change in the repo rate affects the interest of the loan.

Trying to control inflation

To control inflation, the central bank has increased the repo rate. Retail inflation has remained consistently above 7 percent. Reserve Bank Governor Shaktikanta Das said that worldwide inflation is at a record level. India is facing high rates of inflation. June was the sixth consecutive month when retail inflation exceeded the Reserve Bank's upper limit.