Lending rates increase, EMIs set to hurt more

New Delhi, August 16

The downstream effect of the RBI hiking lending rates by 50 basis points on August 5 is now apparent with most banks led by the SBI hiking interest rates by an equal amount while fixed deposit rates have gone up by a much lower amount.

New interest rates rise BY 50 BPS

• EMIs will go up for those borrowers who have availed of loans on marginal cost of funds-based lending rate (MCLR), external benchmark-based lending rate or repo-linked lending rate
• SBI has increased lending rates by 50 basis points while fixed deposit rates have been raised by a much lower amount

Higher EMIs will come as a double blow to new home buyers as inflation has led to an increase in residential property prices with Delhi-NCR seeing the maximum rise in housing prices at 10%, according to real estate consultant Colliers India and data analytics firm Liases Foras.

The SBI’s announcement about a hike in its benchmark lending rate by up to 50 basis points on Monday sent other lenders to follow suit. With the increase in lending rate, EMIs will go up for those borrowers who have availed of loans on marginal cost of funds-based lending rate (MCLR), external benchmark-based lending rate (EBLR) or repo-linked lending rate (RLLR).

On the other hand, the SBI has launched the Utsav Fixed Deposit Scheme, under which it is offering an interest rate of 6.10% per annum on FD with a tenure of 1,000 days. Senior citizens are eligible for an additional interest rate of 0.50% over and above the regular rate. The rates are effective from August 15 and the scheme is valid for 75 days.

The SBI had recently announced higher rates on FDs under Rs 2 crore. The increase in interest rates was generally around 15 bps for various tenors.