RBI Repo rate hike impact: PNB, Bank of India hike lending rates by 50bps; stocks trade flat

Reacting to the repo rate hike by the Reserve Bank of India, two public sector banks, Punjab National Bank (PNB) and Bank of India (BOI) have hiked Repo Linked Lending Rate (RLLR). The central bank had increased repo rate by 50 bps, the second increase in five weeks, in June monetary policy.   

Bank of India rate hike came in to effect from Wednesday, June 8, while the PNB new lending rate will be effective from Thursday, June 9, 2022. 

PNB, BoI rate hike details

"The Exchange is hereby informed that the Repo Linked Lending Rate (RLLR) has been revised from 6.90% to 7.40% w.e.f. 09.06.2022," read a PNB regulatory filing.  

The RLLR has been changed from 6.90% to 7.40% {Repo Rate (4.90%) + Mark-up (2.50%)} w.e.f. 09-06-2022 for existing and new customers. Along with RLLR BSP of 25 bps will be charged, as per the PNB website.  

"All new floating rate personal or Retail loans (housing, auto etc.) and floating rate loans to Micro, Small and Medium Enterprise loans w.e.f. 08th November 2021 onwards will continue with the mark up of 2.50% + 25bps of BSP and the same will be reset after 3 years from the date of the sanction," PNB said.  

Earlier on Wednesday, BoI, in an exchange filing, said the bank's Repo Based Lending Rate (RBLR) has been changed to 7.75% with immediate effect i.e, from 08.06.2022. "The revision is on account of upward revision in Repo Rate announced by RB1, today in its monetary policy," the regulatory filing read.  

Home loan, auto loan, other EMIs to get costlier

Earlier, RBI Governor Shaktikanta Das had said with inflation persistently hovering above the upper tolerance limit of 6 per cent, the RBI's six-member rate-setting panel voted unanimously to raise the lending rate of the repurchase (repo) rate by 50 basis points to 4.90 per cent. 

With this home, auto and other loan EMIs is all set to rise as the banks have already reacted and raise the lending rates. The repo rate is the interest rate at which the RBI lends short-term funds to banks. Hence, with the increase in repo rate, home loans and auto loans are expected to go up. 

"From a real estate perspective, this hike in the policy rate comes as a hurdle as home loan rates will increase, putting a dent on the homebuyer's sentiments," said Ramani Sastri - Chairman & MD, Sterling Developers Pvt. Ltd.

How shares reacted?

Meanwhile, shares of PNB and Bank of India were trading flat on Thursday. At around 10.10 am, shares of PNB were trading flat with marginal cuts to Rs 30.95 per share, while BOI was trading with negligible gain to Rs 46.75 per share on the BSE