Loans get more expensive, rates hiked again by banks

Time to recalculate your EMIs as banks have started raising rates even before the RBI makes its next move. In the latest hike, ICICI Bank has hiked lending rates by 30 bps across tenures.

Not only ICICI but India's largest housing finance company HDFC has increased its retail prime lending rate (RPLR) on housing loans, on which its adjustable rate home loans (ARHL) or floating rates are benchmarked, by 5 basis points.

Following that, Punjab National Bank (PNB), a state-owned bank, hiked its marginal cost of funds-based lending rate by 15 basis points. The increased rates go into effect on June 1

This is the second rate hike from the private lender that had hiked its external benchmark lending rate along with peers by 40 bps early after the RBI's surprise hike. This adds to the inflation pressures on households at a time when savings or investment returns are not catching up.

Despite a hike in FD rates they are nowhere close to beating out inflation. HDFC Bank is now offering 2.50-5.75% for different tenors on domestic term deposits of less than ₹2 crore, while ICICI Bank’s FDs also are in the same range. State Bank of India, which had last revised its FD rates, offers interest of 5.50% on tenors of five years and up to 10 years