The Reserve Bank of India’s (RBI) monetary policy committee (MPC) on Wednesday increased the repo rate by 25 basis points to 6.25%. Cash reserve ratio (CRR) and statutory liquidity ratio (SLR) is kept unchanged at 4% and 19.5%, respectively.
As the central bank revised repo rate, bank deposit rates, the loan interest rate may see a rise in tranches.
All types of loans including home loan, personal loan and car loan– are set to cost more now with the hike in repo rate. Many banks and housing finance companies (HFCs) had already increased their marginal cost of funds-based lending rates (MCLR) recently – ahead of the RBI policy.
Banks including State Bank of India, HDFC, ICICI Bank, PNB, Bank of Baroda, UBI, and Kotak Mahindra Bank have raised their MCLR ranging from 5 bps to 20 bps.
The impact of these hikes will be on the home loan borrowers. As the home loans are taken for a longer period, the financial burden on borrowers will increase with the new rates. Both the existing as well as the potential borrowers of home loan and other loans should be prepared to shell out more.
The six-member MPC, headed by RBI Governor Urjit Patel, announced the rate after an unusual 3-day long deliberation.