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Home / Money / Personal Finance /  ICICI Bank hikes key lending rates by 15 bps: How would your EMI impact?

ICICI Bank hikes key lending rates by 15 bps: How would your EMI impact?

This move of ICICI Bank comes after the Reserve Bank of India (RBI) sharply hiked the main policy repo rate or the rate at which it loans short-term money to banks, by 50 basis points, or to 5.90%, In order to combat inordinate inflation.

  • The private sector lender ICICI Bank has upped its External Benchmark Lending Rate (I-EBLR) by 15 bps

The private sector lender ICICI Bank has upped its External Benchmark Lending Rate (I-EBLR) by 15 bps. According to the bank's official website, the higher rates take effect on September 30, 2022. Additionally, the bank increased all tenors of its Marginal Cost of Funds Based Lending Rate (MCLR) rates by 20 bps on Saturday. This move of ICICI Bank comes after the Reserve Bank of India (RBI) sharply hiked the main policy repo rate or the rate at which it loans short-term money to banks, by 50 basis points, or to 5.90%, In order to combat inordinate inflation.

The private sector lender ICICI Bank has upped its External Benchmark Lending Rate (I-EBLR) by 15 bps. According to the bank's official website, the higher rates take effect on September 30, 2022. Additionally, the bank increased all tenors of its Marginal Cost of Funds Based Lending Rate (MCLR) rates by 20 bps on Saturday. This move of ICICI Bank comes after the Reserve Bank of India (RBI) sharply hiked the main policy repo rate or the rate at which it loans short-term money to banks, by 50 basis points, or to 5.90%, In order to combat inordinate inflation.

ICICI Bank MCLR Rates

According to the bank's official website, the new Marginal Cost of Funds Based Lending Rate (MCLR) rates are effective from October 1, 2022. ICICI Bank hiked its MCLR by 20 bps across all tenors and now the overnight to one-month MCLR stands at 7.85%, three months MCLR is 7.90%, 6 months MCLR is 8.05% and 1-year MCLR stands at 8.10%.

ICICI Bank MCLR Rates

According to the bank's official website, the new Marginal Cost of Funds Based Lending Rate (MCLR) rates are effective from October 1, 2022. ICICI Bank hiked its MCLR by 20 bps across all tenors and now the overnight to one-month MCLR stands at 7.85%, three months MCLR is 7.90%, 6 months MCLR is 8.05% and 1-year MCLR stands at 8.10%.

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ICICI Bank MCLR Rates
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ICICI Bank MCLR Rates
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ICICI Bank has mentioned on its website that “Eligible borrowers can avail Home Loans with attractive interest rates on both floating and fixed rate loans, lower Equated Monthly Instalments (EMIs) and no pre-payment charges on floating loan rates. With extended loan tenures up to 30 years and there are easy repayment options being offered."

ICICI Bank has mentioned on its website that “Eligible borrowers can avail Home Loans with attractive interest rates on both floating and fixed rate loans, lower Equated Monthly Instalments (EMIs) and no pre-payment charges on floating loan rates. With extended loan tenures up to 30 years and there are easy repayment options being offered."

ICICI Bank External Benchmark Lending Rate

The bank has mentioned on its website that “ICICI Bank External Benchmark Lending Rate" (I-EBLR) is referenced to RBI Policy Repo Rate with a mark-up over Repo Rate. I-EBLR is 9.25% p.a.p.m. effective September 30, 2022."

ICICI Bank External Benchmark Lending Rate

The bank has mentioned on its website that “ICICI Bank External Benchmark Lending Rate" (I-EBLR) is referenced to RBI Policy Repo Rate with a mark-up over Repo Rate. I-EBLR is 9.25% p.a.p.m. effective September 30, 2022."

Customers who have home loans will see an increase in their EMIs as a result of the increase in interest rates. Nevertheless, the benchmark to which your loan application is linked will influence. ICICI Bank says that “A floating rate of interest is linked to a benchmark rate. As per guidelines of RBI, floating rate Home Loans from banks are linked to external benchmark rates. ICICI Bank’s floating rate of interest is linked to Repo Rate declared by RBI from time to time. So, rate of interest of your housing loan changes in line with the Repo Rate. As a result, the EMI or the tenure of your loan will increase or decrease, depending on the change in the rate of interest."

Customers who have home loans will see an increase in their EMIs as a result of the increase in interest rates. Nevertheless, the benchmark to which your loan application is linked will influence. ICICI Bank says that “A floating rate of interest is linked to a benchmark rate. As per guidelines of RBI, floating rate Home Loans from banks are linked to external benchmark rates. ICICI Bank’s floating rate of interest is linked to Repo Rate declared by RBI from time to time. So, rate of interest of your housing loan changes in line with the Repo Rate. As a result, the EMI or the tenure of your loan will increase or decrease, depending on the change in the rate of interest."

For a home loan of Rs. 75 lakh at ICICI Bank, the floating rate of interest for salaried borrowers ranges from 8.1% to 8.85%. The interest rate for loans over Rs. 75 lakh is 8.1–8.95%. For self-employed borrowers, the interest rate on a home loan up to Rs. 75 lakh is between 8.20% and 9.00%, and for loans over Rs. 75 lakh, it is between 8.20% and 9.10%.

For a home loan of Rs. 75 lakh at ICICI Bank, the floating rate of interest for salaried borrowers ranges from 8.1% to 8.85%. The interest rate for loans over Rs. 75 lakh is 8.1–8.95%. For self-employed borrowers, the interest rate on a home loan up to Rs. 75 lakh is between 8.20% and 9.00%, and for loans over Rs. 75 lakh, it is between 8.20% and 9.10%.

ICICI Bank has said on its website that “As per Master Direction - RBI (Interest Rate on Advances) Directions, 2016, the interest rate under external benchmark shall be reset at least once in months. Thus, the Repo Rate component of the Interest Rate will be reset on the first day of the third subsequent month from the month in which the Facility is first disbursed (irrespective of the date of disbursement) and every three months thereafter, as a sum of Repo Rate + “Spread", plus applicable statutory levy, if any. The applicable Repo Rate shall be the rate prevailing one business day preceding the reset date."

ICICI Bank has said on its website that “As per Master Direction - RBI (Interest Rate on Advances) Directions, 2016, the interest rate under external benchmark shall be reset at least once in months. Thus, the Repo Rate component of the Interest Rate will be reset on the first day of the third subsequent month from the month in which the Facility is first disbursed (irrespective of the date of disbursement) and every three months thereafter, as a sum of Repo Rate + “Spread", plus applicable statutory levy, if any. The applicable Repo Rate shall be the rate prevailing one business day preceding the reset date."

“As per Master Direction - RBI (Interest Rate on Advances) Directions, 2016, floating rate loan means a loan on which interest rate does not remain fixed during the tenure of the loan. Hence, in case of floating interest rate loan, the benchmark rate of the loan gets revised on a pre-defined frequency. As per RBI guidelines, floating interest rate loans linked to external benchmark should reset at least once in three months," said ICICI Bank on its website under FAQs section.

“As per Master Direction - RBI (Interest Rate on Advances) Directions, 2016, floating rate loan means a loan on which interest rate does not remain fixed during the tenure of the loan. Hence, in case of floating interest rate loan, the benchmark rate of the loan gets revised on a pre-defined frequency. As per RBI guidelines, floating interest rate loans linked to external benchmark should reset at least once in three months," said ICICI Bank on its website under FAQs section.

How much would your EMI increase?

If the effective repo rate has risen as of the reset date, the effective ROI of the loan account will also rise, which will have an influence on the loan's EMI and tenure. Accordingly, the interest on home loan EMIs at ICICI Bank would rise as well as a result of the new raise, which is 15 bps. Taking into account a customer who obtained a home loan for Rs. 50 lakh with a 20-year term. If, for example, the borrower's home loan's previous interest rate was 9.10%, the new rate after the hike of 15 bps will be 9.25% per cent annually. On an Rs. 50 lakh home loan on a 20-year tenure at a rate of interest of External Benchmark Lending Rate of 9.10 per cent, the customer will have to pay an EMI of 45,308, but after the EBLR rate hike of 15 bps to 9.25% per annum of ICICI Bank, your EMI would increase to 45,793 which in turn increase your interest amount to 59,90,401 and hence total amount payable would be 1,09,90,401. 

How much would your EMI increase?

If the effective repo rate has risen as of the reset date, the effective ROI of the loan account will also rise, which will have an influence on the loan's EMI and tenure. Accordingly, the interest on home loan EMIs at ICICI Bank would rise as well as a result of the new raise, which is 15 bps. Taking into account a customer who obtained a home loan for Rs. 50 lakh with a 20-year term. If, for example, the borrower's home loan's previous interest rate was 9.10%, the new rate after the hike of 15 bps will be 9.25% per cent annually. On an Rs. 50 lakh home loan on a 20-year tenure at a rate of interest of External Benchmark Lending Rate of 9.10 per cent, the customer will have to pay an EMI of 45,308, but after the EBLR rate hike of 15 bps to 9.25% per annum of ICICI Bank, your EMI would increase to 45,793 which in turn increase your interest amount to 59,90,401 and hence total amount payable would be 1,09,90,401. 

 

 

ABOUT THE AUTHOR

Vipul Das

Vipul Das is a Digital Business Content Producer at Livemint. He previously worked for Goodreturns.in (OneIndia News) and has over 5 years of expertise in the finance and business sector. Stocks, mutual funds, personal finance, tax, and banking are among his specialties, and he is a professional in industry research and business reporting. He received his bachelor's degree from Dr. CV Raman University and also have completed Diploma in Journalism and Mass Communication (DJMC).
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