Several PSU banks hike lending rates after RBI raises repo rate by 25 basis points

Representational Image. File pic.

After the Reserve Bank of India (RBI) raised its repo rate for the first time in nearly for years, several banks such as Punjab National Bank, Indian Bank and Bank of Baroda announced an increase in their lending rates, with effect from October 8. This will make loan borrowing expensive.

The apex bank on Wednesday had hiked its key lending rate by 25 basis points to 5.50 per cent, the first rate hike since February 2023 and had said near term rate cuts were off the table while changing its monetary policy stance from neutral to calibrated tightening.

PNB raises rates

Public sector lender Punjab National Bank in a regulatory filing on Wednesday said it has revised the repo linked lending rate by 25 basis points with effect from Thursday, October 8.

"The Exchange is hereby informed that consequent upon increase in Repo rate by RBI on 07.10.2026, Bank has revised Repo Linked Lending Rate (RLLR) from 8.10 per cent (including BSP of 0.35 per cent) to 8.35 per cent (including BSP of 0.35 per cent) with effect from 08.10.2026," Punjab National Bank said.

However, the Marginal Cost of Lending Rate (MCLR) and Base Rate would remain unchanged, the state-owned lender added.

Indian Bank, Bank of India hike rates

Similarly, Indian Bank in a regulatory filing said it has revised the rates in line with the increase in Policy Repo Rate of 25 bps by Monetary Policy Committee (MPC) of RBI, effective October 8.

The public sector lender said the Repo Linked Benchmark Lending Rates (RBLR) has been revised to 8.20 per cent from 7.95 per cent earlier. It added that other benchmark rates remain unchanged.

PSU (Public Sector undertaking) lender Bank of Baroda (BoB), increased its Repo Based Lending Rate to 8.15 per cent from 7.90 per cent.

Bank of India and Indian Overseas Bank increase lending rates

Bank of India (BoI) and Indian Overseas Bank (IOB) raised their Repo Based Lending Rate (RBLR) to 8.35 per cent from 8.10 per cent, effective October 8. Both the banks had intimated the changes in separate regulatory filings.

Private sector bank hikes rate

According to news agency PTI, private sector side, Tamilnad Mercantile Bank has increased its Repo Linked Lending Rate (RLLR) to 8.5 per cent from 8.25 per cent.

Other banks are expected to follow suit in line with the RBI's monetary policy announcement.

(With inputs from PTI)