According to SBI’s website, “The Benchmark Prime Lending Rate (BPLR) has been revised to 13.45% as on 15.09.2022.
SBI last increased the base rate and BPLR on June 15, 2022, according to its website. These are the old benchmarks on which banks used to lend. Now most of the banks provide loans at External Benchmark Based Lending Rate (EBLR).
What is the base rate of the bank?
base rate is minimum Rate of interest on which a bank can lend to its customers who still have loans under the base rate regime. As a result, the overall interest rate of these old borrowers with floating rate loans such as home loans will increase, due to which they will either pay the increased monthly installments (EMIs) or their loan tenure will be extended.
Will other credit arrangements be affected?
This Base Rate hike is not likely to be restricted to Base Rate only as we may soon see other benchmark rates like MCLR and external benchmarks moving forward as well. All borrowers who had taken a floating rate home loan between July 2010 and March 2016 and have not yet shifted their loan to a new regime like MCLR or EBR, will be affected by this rate hike.
What is the Benchmark Prime Lending Rate?
The term “benchmark rate” refers to the standard rate used to calculate loan interest rates. According to RBI, “Benchmark Prime Lending Rate (BPLR) means the internal benchmark rate used to determine the interest rates on advances/loans sanctioned up to June 30, 2010.”
RBI hikes repo rates
The Reserve Bank of India, in its policy review, increased the repo rate, which is the main policy rate, by 0.5 percentage points. Since the interest rate hike earlier this year, the RBI has hiked rates three times in a row.
After the hike in the RBI repo rate, many banks, including ICICI Bank, Bank Of Baroda, PNBAnd HDFC bankincreased its interest rates on loans.