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Banks hike rates ahead of RBI policy

Banks hike rates ahead of RBI policy

Banks hike rates ahead of RBI policy
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By Suman Singh  Jun 8, 2018 12:44 PM IST (Updated)

India's top three banks in terms of lending, State Bank of India, ICICI Bank and Punjab National Bank have increased their marginal cost of lending rates (MCLR) by 10 basis points, with effect from June 1, 2018, ahead of the Reserve Bank of India (RBI) policy meeting.

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SBI has raised it’s one-year MCLR to 8.25%, from 8.15%, while ICICI Bank’s one-year MCLR stands at 8.40% from the earlier 8.30%.
Punjab National Bank’s MCLR also increased to 8.40% from the previous 8.30%.
Kotak Mahindra Bank also raised its one-year MCLR by 20 basis points to 8.90%
HDFC Bank has increased its retail prime lending rates (RPLR) by 10 basis points to 16.45%, the bank said in a statement on Friday, adding that it will be put to effect from June 2, 2018.
The RPLR is the basis on which the bank’s adjustable rate home loans are benchmarked. HDFC Bank’s effective rate for housing loans upto Rs 30 lakh stands at 8.55%.
HDFC is the second bank after the State Bank of India to raise its rates.
RBI is expected to raise its interest rates on the back of India's annual consumer price inflation, which accelerated in April to 4.58%, above the central bank's target of 4% for the sixth month in a row, after easing in each of the three previous months.
"As global market turmoil takes its toll, we are changing our RBI policy rate call from an extended pause to a 25 basis point hike at the August meeting," said Kunal Kundu, India economist at Societe Generale, adding that the RBI may announce a change in policy stance during the June meeting and follow that up with a hike in August.
"It’s going to be a close call. Our view was that they will hike by August by Reserve Bank of India (RBI). So at this point of time, we are varying around to hike in June policy itself", A Prasanna, Chief Economist at I-Sec PD said.
With India importing 80% of its fuel needs and government spending increasing before national elections next year, which will likely add to price pressures, expectations have firmed for the RBI to move away from a neutral stance in the next meeting.
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