SBI, PNB lending-rates hiked: Home and other loans get costlier
What's the story
Two state-run lenders State Bank of India and Punjab National Bank raised their lending rates by up to 20 basis points, a move that will increase interest-rates on existing as well as home, auto loans, and personal loans.
SBI raised its one-year MCLR (marginal cost of fund-based lending rate) by 20bps to 8.15%, PNB increased its loan prices by 15bps to 8.30%.
Here's more.
Details
Lending rate hike comes despite RBI's neutral stance
The lending rate hike by these state-run lenders comes even as the Reserve Bank of India has been in an accommodative/neutral stance since January 2015. The present RBI rate or repo rate is 5.75% now.
Even in the last policy review early last month, the central bank had sounded more accommodative than hawkish even though it increased its inflation forecast.
SBI
SBI defends hike that will hurt all borrowers
SBI said, "In the past one month, liquidity situation, which used to be in surplus has become neutral or maybe in a minor deficit mode."
"Also, bond-yields have gone up by around 125-150bps over the past few months. Given the liquidity situation, some alignment was required and it has been done today," SBI MD and Head of Retail and Digital Banking PK Gupta said.
Lending Rate
SBI lending rate lower than other banks': Gupta
The lending rate hike also comes in the wake of banks as a whole seeing pick-up in credit demand. After many years of low single-digit credit growth, the quarterly loan demand crossed the double-digit mark at close to 11% in the three months to December 2017.
Gupta said even after this increase, SBI's lending rate is marginally lower than what other banks are offering.
Quote
Risk of inflation on the upside: Gupta
"Earlier, the whole market was in a downward-cycle but now the feeling is that the risk for inflation is on the upside only. The downward-cycle is over and the rate should probably remain stable around the current rates for some time," SBI's Gupta said.
SBI, PNB
SBI's six-month MCLR hiked to 8%
The State Bank raised its six-month MCLR by 10bps to 8%, while its three-year loan pricing goes up by 25bps to 8.35%.
The Delhi-based PNB, which is firefighting the largest financial fraud in the country and staring at a possible loss of around Rs. 13,000 crore, has also followed its larger per hiked its one-year MCLR rate by 15bps to 8.30%.
SBI Rates
SBI earlier raised retail, bulk term deposit rates
Meanwhile, the SBI's move comes a day after it had raised its retail and bulk term deposit rates for various maturities by up to 75 bps.
For retail deposits, below Rs. 1 crore, the rate was increased by up to 0.50%, while for deposits maturing in one year to less than two years, it was hiked by 0.15% to 6.40%.
PNB Rates
PNB's retail, bulk term deposits increased by up to 45bps
PNB raised the overnight, one-month, three-month, and six-month rates by 15bps to 7.80%, 7.95%, 8.10%, and 8.25%, respectively.
PNB also increased its retail and bulk term deposits by up to 45bps. For retail deposits maturing in one-year to three-year, the rate has been increased by 25bps to 6.75%.
The bulk deposits for one-year maturity has been increased to 6.75% from 6.50%.