Mumbai, All major commercial banks have raised their External Benchmark Based Lending Rates (EBLR) sequentially by 1.9 percent, coinciding with the increase in the policy repo rate by the Reserve Bank of India from May this year. However, these banks have been slow in increasing deposit rates.
The RBI has increased the key policy rate repo by a total of 1.9 per cent in four tranches since May to check inflation. The monetary policy committee (MPC) of the central bank will meet again early next month to deliberate on interest rates. It is believed that in this meeting the MPC may once again decide to increase the repo rate.
According to an RBI article, banks have increased the EBLR by 1.9 percent from May, 2022 till the end of October, 2022. In addition, banks increased the marginal cost of funds based lending rate (MCLR) by 0.85 percent from May to October 2022. This increase has happened for one year MCLR.
However, compared to this, banks increased interest rates on fixed deposits very little. Average fixed deposit rates increased by 0.48 percent on fresh deposits from May to October 2022. Banks have increased their wholesale deposit rates more than retail deposit rates.