Loan EMIs to increase as major banks hike interest rates
What's the story
ICICI Bank, Punjab National Bank (PNB), and Bank of India (BOI) have updated their marginal cost-based lending rates (MCLR) on loans.
These hikes will result in higher equated monthly installments (EMIs) for borrowers. People who took consumer loans, including auto, personal, and home, are bound to feel the pinch of this.
According to bank websites, the revised rates came into effect starting August 1.
Details
ICICI Bank's MCLR rate stands at 8.9%
MCLR is the lowest rate at which banks can lend to customers. It helps calculate the minimum interest rate for various loan types.
ICICI Bank raised its MCLR rates, with the one-year rate now at 8.9%. PNB kept its MCLR rates unchanged for August, with the one-year rate at 8.6%.
BOI increased rates on select tenors, with the one-year rate now at 8.7%.
What Next?
Rising lending rates have multiple economic impacts
The lending rate hikes may have consequences for borrowers and the overall economy.
Borrowers will face higher EMIs, potentially reducing disposable income and consumer spending. This could impact the economy by decreasing demand for goods and services, leading to reduced production and employment.
Additionally, higher lending rates could result in decreased borrowing and investment by businesses, further affecting economic growth.