State-owned Indian Bank said on Saturday it has revised its repo-pegged borrowing rate from 4 percent to 4.40 percent effective Monday (May 9).
The move comes after a number of banks raised their external benchmark-based lending rates following a 0.40 percent rise in the repo rate – at which the Reserve Bank lends short-term money to banks.
The bank’s Asset Liability Management Committee (ALCO) has revised the lending rate for all loans/advances associated with the policy’s repo rate and revised the lending rate associated with the repo-based repo rate from 4 percent to 4.40 per cent.” Indian Bank said in a regulatory filing.
The bank’s revised borrowing rate will take effect from May 9, 2022 for new customers and from June 1, 2022 for all existing customers of the bank.
A number of banks, including ICICI Bank, Punjab National Bank, Bank of Baroda, Central Bank of India, Bank of India and mortgage lender HDFC Ltd, have announced increases in repo-related lending rates.
Banks and financial institutions are in the process of raising interest rates following an increase in the repo rate and the cash reserve ratio (percentage of the total deposit of the banks held with the RBI) by 40 basis points and 50 basis points respectively announced by the RBI earlier this week .
After an out-of-turn meeting of the Monetary Policy Committee (MPC), the Reserve Bank raised its benchmark repo rate by 0.40 percent to 4.40 percent with immediate effect on Wednesday, with a view to curbing rising inflation.