The hit of expensive loans has started now ICICI Bank has given the first blow and has increased the external benchmark lending rate by 50 percent. Now this rate has reached 8.60. ICICI Bank has taken this decision after the announcement taken by the Reserve Bank of India (RBI) yesterday. RBI had increased the repo rate by 50 basis points (bps) yesterday. Now it is 4.90 percent.

ICICI Bank said the External Benchmark Lending Rate (EBLR) will be effective from June 8. The bank said the increase was due to the RBI's increase in repo rate. EBLR is the rate of interest that banks do not approve of lending at a lower rate. The EBLR was just extended on May 5. The second-largest bank in the private sector has simultaneously increased the MCLR. These increased rates have become effective from June 01. The bank said the MCLR for overnight, one month and three months is now 7.30 per cent and 7.35 per cent respectively. Similarly, the revised MCLR is 7.50 per cent for 6 months and 7.55 per cent for the year-round.

The Reserve Bank has raised the repo rate by 0.50 per cent to 4.90 per cent this month. Earlier, in the May emergency meeting, it was increased by 0.40 per cent to 4.40 per cent. There was no change in the repo rate since August 2018 and the policy interest rates (RBI policy rates) remained at their historic lows. After the Coronavirus, interest rates in almost all the economies were brought down to a record low. Now, after a gap of about 4 years, the period of increase in repo rate has come back. Then, all the banks started raising the interest rates.

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