HomeLoanICICI Bank and PNB hike external benchmark-based lending rates

ICICI Bank and PNB hike external benchmark-based lending rates

ICICI Bank and PNB hike external benchmark-based lending rates: After the Reserve Bank of India (RBI) hiked the repo rate on Thursday last week, two major banks – ICICI Bank and PNB – increased their lending rates on Friday.

ICICI Bank said in a notification that the ICICI Bank External Benchmark Lending Rate (I-EBLR) is referred to the RBI policy repo rate along with the mark-up on the repo rate.

ICICI Bank and PNB hike external benchmark-based lending rates

“The i-EBLR is 9.10 percent PAPM (payable monthly per annum) with effect from August 5, 2022,” the ICICI Bank lender said.

After this, Punjab National Bank (PNB) also increased the repo, external benchmark, and linked lending rate to 7.90 percent.

“Consequent to the increase in the repo rate by the RBI, the Repo Linked Lending Rate (RLLR) has been increased from 7.40 percent to 7.90 percent with effect from August 8, 2022,” PNB said in a regulatory filing.

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As per RBI directions, the interest rate under the external benchmark should be reset at least once in three months.

Subsequently, from 1 October 2019, all new floating rate personal and retail loans (housing, auto), and floating rate loans by banks to micro and small enterprises were linked to an external benchmark (repo) rate.

Therefore, banks may take the external benchmark as the repo rate of the RBI or the government’s treasury bill-based yields published by Financial Benchmarks India Private Limited (FBIL) or any other benchmark market interest rate published by FBIL.

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Lenders are free to offer such external benchmark-linked loans to other types of borrowers as well as to fix the spread on the external benchmark.

Earlier this month, ahead of the RBI policy rate announcement, ICICI Bank revised the marginal cost of funds-based lending rate (MCLR) to 0.15 percent for all tenors.


On Thursday, the RBI increased the repo rate, at which it lends short-term money to banks, to a three-year high of 5.40 percent in its effort to tame inflation.

Retail inflation has remained at an all-time high of over 6 percent for the past six months.

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