With RBI moving to rise rate cycle, banks hike RLLR
- Several banks have raised their repo rate-linked lending rates (RLLR) after the Reserve Bank of India (RBI) increased the repo rate by 50 basis points (bps) to 5.40 per cent.
Key highlights
- Public sector lenders as well as private sector Banks have raised their RLLRs.
- RLLR is linked to or is based on the repo rate and is revised every time the RBI changes policy rates.
- With the RBI moving into a rising rate cycle, banks too have started raising their lending rates, both externally benchmarked and the marginal cost of funds-based (MCLR).
- As the transmission of monetary policy takes place more effectively under the EBLR regime, banks are opting to switch to the system.
- While banks revise RLLR whenever there is a change in repo rate, MCLR is revised by lenders every month.
Prelims take away
- Reserve Bank of India (RBI)
- Marginal cost of funds-based (MCLR).
- Repo rate-linked lending rates (RLLR)