ICICI Bank, Bank of India, Indiabulls hike rates ahead of MPC meeting

ICICI Bank, Bank of India, Indian Bank, and Indiabulls Housing Finance increased their lending rates on Monday, acting ahead of the monetary policy committee (MPC) meeting scheduled later this week.

ICICI Bank increased its marginal cost of funds based lending rate (MCLR) by 15 basis points across tenors. The overnight and one-month MCLR now stands at 7.65 per cent; three-month MCLR at 7.70 per cent; six-month MCLR at 7.85 per cent; and one-year MCLR by 7.90 per cent.

Bank of India raised its MCLR by 10 basis points across tenors, taking its overnight MCLR to 6.80 per cent; one-month MCLR to 7.30 per cent; three-month MCLR to 7.35 per cent; six-months MCLR to 7.45 per cent; one-year MCLR to 7.60 per cent; and three-year MCLR to 7.80 per cent.

Another public sector lender Indian Bank raised its MCLR by 10-20 bps across tenors, effective August 3. Accordingly, overnight MCLR now stands at 6.85 per cent; one-month MCLR at 7.15 per cent; three-month MCLR at 7.25 per cent; six-month MCLR at 7.50 per cent; and one-year MCLR at 7.65 per cent.

Mortgage financier Indiabulls Housing Finance also raised its lending rates by 25 basis points. The revised rates will be effective from August 1 for new borrowers while for existing borrowers, the new lending rates will be effective from August 5 onwards.

“Indiabulls Housing Finance Ltd. revises its reference rates on housing loans and MSME loans by 25 basis points in line with other leading home loan lenders and banks recent revisions,” it said in a notification to the exchanges on Monday.

WHO RAISED HOW MUCH

• ICICI Bank hikes MCLR by 15 bps across tenors
• Bank of India raises MCLR by 10 bps across tenors
• Indiabulls hikes lending rate by 25 bps
• Indian Bank raises MCLR by 10-20 bps across tenors
• HDFC increases home loan rate by 25 bps

Last week, HDFC raised its home loan rates by 25 basis points, its fifth hike in the last two months. The mortgage lender has raised its rates by 115 basis points since May this year.

The revised rates for new borrowers range between 7.80 per cent and 8.30 per cent, depending on credit and loan amount. The existing range is 7.55 per cent to 8.05 per cent. For existing customers, the rates will rise by 25 basis points or (0.25 per cent).

HDFC has moved from a quarterly reset for individual loans to a monthly reset to reduce the impact of transmission of rate changes. Its net interest income and net interest margin was impacted in Q1 because the interest rate actions by the central bank had an impact on the borrowing cost of the lender without a simultaneous transmission on the asset side.

Last week, Kolkata-based Bandhan Bank raised its MCLR by 18–88 basis points, effective July 30. Consequently, the overnight, one-month, and three-months MCLR stands at 8.49 per cent; six months MCLR at 9.09 per cent; 1-year MCLR at 9.45 per cent; 2-year MCLR at 9.78 per cent; and 3-year MCLR at 10.06 per cent.

The MPC has increased benchmark interest rates by 90 bps this year, taking the repo rate to 4.90 per cent. It had raised interest rate by 40 bps in May and followed it up by a 50 bps hike in June. It is widely believed that the six-member committee is likely to announce a repo rate hike of 35-50 bps in its policy statement on August 5 in a bid to tackle elevated inflation.

Given headline inflation is well above RBI’s tolerance limit of 2-6 per cent, a fresh rate hike on August 5 is being considered a certainty by economists and market participants.

The latest data showed that headline retail inflation was at 7.01 per cent in June, marking the sixth consecutive month when the price gauge was above the RBI’s mandated zone.