ICICI Bank won’t hike rates on existing home loans. ICICI Bank, the country’s largest retail lender, has decided to hold interest rates charged to existing home loan borrowers, while three government-owned banks — Punjab National Bank (PNB), Bank of Baroda (BoB) and Bank of India (BoI) — hiked their interest rates across the board with effect from tomorrow.
PNB, BoB and BoI have all raised their benchmark prime lending rates (PLR) by 50 basis points each. One basis point is one hundredth of one per cent. PNB’s prime lending rate now is 12.25 per cent and BoI’s 12.50 per cent.
PNB had increased its PLR in early last month by 25 basis points and BoI by 50 basis points. BoB’s PLR has increased to 12.50 per cent.
Banks are raising lending rates to make up for the increase in cost of funds, loss on account of zero-interest CRR balances and depreciation in marked-to-market investments as yields harden.
Several public sector banks are also considering charging much higher interest on home loans of above Rs 15 lakh.