China has opted to keep its benchmark lending rates steady during the monthly fixing on Monday, signalling limited room for monetary easing in the face of growing pressure on the yuan. Last week, the People's Bank of China (PBOC) surprised markets by maintaining its medium-term lending facility rate, showcasing a cautious stance. <o:p></o:p>

The central bank's decision, despite recent economic data revealing uneven recovery and deflationary concerns impacting borrowing costs, underscores its reluctance to exacerbate yuan depreciation. Reuters cited Julian Evans-Pritchard from Capital Economics who noted policymakers' "lingering concerns" about the yuan, predicting a cautious approach with a focus on quantitative easing tools.<o:p></o:p>

The one-year loan prime rate (LPR) remains at 3.45 per cent, while the five-year LPR stands unchanged at 4.20 per cent. In a recent Reuters poll involving 27 market watchers, all but one participant anticipated the status quo for both LPRs. The one-year LPR significantly influences most new and existing loans in China, whereas the five-year rate impacts mortgage pricing. <o:p></o:p>

Despite signs of resilience in the US economy, the yuan faced downward pressure at the beginning of the year, weakening by approximately 1.3 per cent year-to-date. Analysts, including Evans-Pritchard, anticipate the PBOC to resume rate cuts once the yuan stabilizes, projecting a 20 basis point reduction by the end of the second quarter.<o:p></o:p>

Last year, the PBOC reduced the one-year LPR twice by a total of 20 basis points, and the five-year LPR saw a 10 basis point decrease. As the Lunar New Year holidays approach, market observers expect the central bank to increase liquidity injections to meet heightened cash demand from corporations and households. <o:p></o:p>

The week-long holiday begins on February 10 this year. Analysts, as reported by the state-owned China Securities Journal, suggest the PBOC may utilise methods such as reverse repos in open market operations, with the possibility of a reduction in banks' reserve requirement ratio (RRR).<o:p></o:p>

(With inputs from Reuters)<o:p></o:p>

China has opted to keep its benchmark lending rates steady during the monthly fixing on Monday, signalling limited room for monetary easing in the face of growing pressure on the yuan.

China has opted to keep its benchmark lending rates steady during the monthly fixing on Monday, signalling limited room for monetary easing in the face of growing pressure on the yuan. Last week, the People's Bank of China (PBOC) surprised markets by maintaining its medium-term lending facility rate, showcasing a cautious stance. The central bank's decision, despite recent economic data revealing uneven recovery and deflationary concerns impacting borrowing costs, underscores its reluctance to exacerbate yuan depreciation. Reuters cited Julian Evans-Pritchard from Capital Economics who noted policymakers' "lingering concerns" about the yuan, predicting a cautious approach with a focus on quantitative easing tools. The one-year loan prime rate (LPR) remains at 3.45 per cent, while the five-year LPR stands unchanged at 4.20 per cent. In a recent Reuters poll involving 27 market watchers, all but one participant anticipated the status quo for both LPRs. The one-year LPR significantly influences most new and existing loans in China, whereas the five-year rate impacts mortgage pricing. Despite signs of resilience in the US economy, the yuan faced downward pressure at the beginning of the year, weakening by approximately 1.3 per cent year-to-date. Analysts, including Evans-Pritchard, anticipate the PBOC to resume rate cuts once the yuan stabilizes, projecting a 20 basis point reduction by the end of the second quarter. Last year, the PBOC reduced the one-year LPR twice by a total of 20 basis points, and the five-year LPR saw a 10 basis point decrease. As the Lunar New Year holidays approach, market observers expect the central bank to increase liquidity injections to meet heightened cash demand from corporations and households. The week-long holiday begins on February 10 this year. Analysts, as reported by the state-owned China Securities Journal, suggest the PBOC may utilise methods such as reverse repos in open market operations, with the possibility of a reduction in banks' reserve requirement ratio (RRR). (With inputs from Reuters)

China maintains stability in benchmark lending rates amid yuan pressure

Amid efforts to revive&nbsp;its sluggish economy, the second-largest in the world, China has slashed key benchmark lending rates, a move taken for the second time this year, media reports said.&nbsp;The People's Bank of China (PBOC) took action on Monday by decreasing the one-year loan prime rate (LPR) by 10 basis points from 3.55 per cent to 3.45 per cent.

Notably, there was no change to the five-year rate, which remains at 4.20 per cent. This move to lower the one-year benchmark lending rate was widely expected.

Days back, China, in an unexpected turn of events, cut down key policy rates, a decision which clearly indicated an escalated effort by Chinese authorities to implement monetary easing measures. This development sparked speculation about a potential cut in China's lending benchmark loan prime rate (LPR), which turned out to be the case on Monday.&nbsp;

Also Read | <a href="https://www.wionews.com/world/ecowas-rejects-niger-coup-leaders-pitch-to-restore-civilian-rule-in-three-years-627364">ECOWAS rejects Niger coup leader's pledge to restore civilian rule in three years</a>

However, economists were surprised by the absence of cuts to the five-year rate, media reports said.&nbsp;

<h2>What were the expectations?&nbsp;&nbsp;</h2>

A majority of experts surveyed by Reuters had foreseen a 15-basis-point reduction in the one-year rate, which significantly influences new and existing loans. Moreover, these analysts had anticipated a decrease of at least 15 basis points in the five-year rate, which serves as a reference rate for mortgages. The surprise absence of action on the five-year rate left many puzzled.

<h2>Economic factors driving the decision</h2>

Credit growth decline and escalating deflation concerns in July have led to the need for additional monetary easing measures to counteract the economic slowdown.&nbsp;

Also Read | <a href="https://www.wionews.com/world/south-africas-president-ramaphosa-calls-for-unsc-reform-sets-pitch-for-brics-expansion-ahead-of-summit-627366">South Africa's President Ramaphosa calls for UNSC reform, sets pitch for BRICS expansion ahead of summit</a>

The market has also been affected by apprehensions about potential defaults from housing developers and payment defaults by private wealth management firms, causing a decrease in financial market confidence.

Most recently, real estate behemoth Evergrande has filed for bankruptcy protection in the United States amid the escalating real estate turmoil in China.&nbsp;Tommy Wu, Senior China economist at Commerzbank, said,&nbsp;"All of these add to the urgency that policymakers need to act fast before consumer and business confidence deteriorate sharply."&nbsp;

<h2>MLF rates&nbsp;</h2>

Earlier, PBOC reduced the interest rate for one-year medium-term lending facility (MLF) loans totalling 401 billion yuan ($55.25 billion) provided to certain financial institutions. The rate was lowered by 15 basis points, settling at 2.50 per cent as opposed to the previous 2.65 per cent.

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In an online statement, the PBOC clarified that this infusion of funds was aimed at mitigating various factors, including tax payments, with the intention of maintaining a suitable level of liquidity within the banking system.

(With inputs from agencies)

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Amid efforts to revive its sluggish economy, the second-largest in the world, China has slashed key benchmark lending rates, a move taken for the second time this year, media reports said.

Amid efforts to revive its sluggish economy, the second-largest in the world, China has slashed key benchmark lending rates, a move taken for the second time this year, media reports said. The People's Bank of China (PBOC) took action on Monday by decreasing the one-year loan prime rate (LPR) by 10 basis points from 3.55 per cent to 3.45 per cent. Notably, there was no change to the five-year rate, which remains at 4.20 per cent. This move to lower the one-year benchmark lending rate was widely expected. Days back, China, in an unexpected turn of events, cut down key policy rates, a decision which clearly indicated an escalated effort by Chinese authorities to implement monetary easing measures. This development sparked speculation about a potential cut in China's lending benchmark loan prime rate (LPR), which turned out to be the case on Monday. Also Read | ECOWAS rejects Niger coup leader's pledge to restore civilian rule in three years However, economists were surprised by the absence of cuts to the five-year rate, media reports said. What were the expectations? A majority of experts surveyed by Reuters had foreseen a 15-basis-point reduction in the one-year rate, which significantly influences new and existing loans. Moreover, these analysts had anticipated a decrease of at least 15 basis points in the five-year rate, which serves as a reference rate for mortgages. The surprise absence of action on the five-year rate left many puzzled. Economic factors driving the decision Credit growth decline and escalating deflation concerns in July have led to the need for additional monetary easing measures to counteract the economic slowdown. Also Read | South Africa's President Ramaphosa calls for UNSC reform, sets pitch for BRICS expansion ahead of summit The market has also been affected by apprehensions about potential defaults from housing developers and payment defaults by private wealth management firms, causing a decrease in financial market confidence. Most recently, real estate behemoth Evergrande has filed for bankruptcy protection in the United States amid the escalating real estate turmoil in China. Tommy Wu, Senior China economist at Commerzbank, said, "All of these add to the urgency that policymakers need to act fast before consumer and business confidence deteriorate sharply." MLF rates Earlier, PBOC reduced the interest rate for one-year medium-term lending facility (MLF) loans totalling 401 billion yuan ($55.25 billion) provided to certain financial institutions. The rate was lowered by 15 basis points, settling at 2.50 per cent as opposed to the previous 2.65 per cent. Watch | Pakistan: President Arif Alvi denies signing of key laws × In an online statement, the PBOC clarified that this infusion of funds was aimed at mitigating various factors, including tax payments, with the intention of maintaining a suitable level of liquidity within the banking system. (With inputs from agencies) WATCH WION LIVE HERE You can now write for wionews.com and be a part of the community. Share your stories and opinions with us here. ×

China slashes key benchmark lending rates to revive sluggish economy

Adding to the easing measures announced last week, China has cut its benchmark lending rates today. Beijing is stepping up its efforts to spur credit demand in an economy that's been hobbled by a property crisis and also a resurgence of covid-19 infections.

China steps up easing lending rates to revive faltering economy

Saddled with an economy that is growing at a snail's pace in the aftermath of a global pandemic, China on Monday slashed its lending rates to resuscitate economic growth. Reportedly, Chinese banks cut the one-year loan prime rate (LPR) from 3.7 per cent to 3.65 per cent.&nbsp;

Moreover, to resurrect the fortunes of the failing housing market in China, the&nbsp;People’s Bank of China (PBOC) also cut the five-year LPR, a reference for mortgages by 15 basis points to 4.3 per cent.

It is pertinent to note that LPR forms the basis on which most new and outstanding loans are paid. The rate is decided by a group of 18 banks. For a long time, it has been considered the&nbsp;facto benchmark funding of China.&nbsp;

Read More:&nbsp;<a href="https://www.wionews.com/world/china-to-miss-its-year-end-55-per-cent-economic-growth-target-501801">China to miss its year-end 5.5 per cent economic growth target</a>

Whenever an economy is in a downturn, the banks usually cut down the lending rates, which effectively reduces the interest rates on loans and mortgages.

Low-interest rates mean that consumers will engage in more lending activities, thereby providing a kick to the economy. Credit demand has been at an all-time low in the Chinese market due to the sudden closure of cities and towns due to Covid.&nbsp;

Why is China's growth story at a halt?

As reported by WION, while countries across the globe are opening up their borders and economies after braving a pandemic, Beijing is employing draconian measures to keep up with its 'zero-Covid tolerance' policy.

The strategy has been one of the primary reasons why China has lagged in its economic recovery. For months, the tough lockdown measures imposed by the Communist Party of China (CCP) led to a decrease in manufacturing as factories and offices were closed down for prolonged periods.

Read More:<a href="https://www.wionews.com/world/chinas-economic-growth-drops-to-04-per-cent-amid-draconian-lockdown-measures-and-severe-heatwave-497575">&nbsp;China's economic growth drops to 0.4 per cent amid draconian lockdown measures and severe heatwave</a>

It hasn't helped the cause that mainland China is facing one of the most severe bouts of heatwave in recent memory. The intense heat has caused the Yangtze river to run dry while the electric grid faces the excruciating task of meeting growing power consumption demands.&nbsp;

Earlier this week, Goldman Sachs cut China's growth forecast by 0.3 per cent from 3.3 per cent to 3 per cent. Meanwhile, Nomura lowered its projections from 3.3 per cent to 2.8 per cent.

Read More: <a href="https://www.wionews.com/world/dark-clouds-for-china-goldman-sachs-and-nomura-slash-chinas-gdp-outlook-508231">Dark clouds for China: Goldman Sachs and Nomura slash China's GDP outlook</a>

The downgrade comes on the heels of the Chinese economy growing by a tiny 0.4 per cent in the quarter while the Politburo giving up on the 5.5 per cent economic growth rate prediction by the year-end.

(With inputs from agencies) 
 
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&nbsp;

Saddled with an economy that is growing at a snail's pace in the aftermath of a global pandemic, China on Monday slashed its lending rates to resuscitate economic growth.

Saddled with an economy that is growing at a snail's pace in the aftermath of a global pandemic, China on Monday slashed its lending rates to resuscitate economic growth. Reportedly, Chinese banks cut the one-year loan prime rate (LPR) from 3.7 per cent to 3.65 per cent. Moreover, to resurrect the fortunes of the failing housing market in China, the People’s Bank of China (PBOC) also cut the five-year LPR, a reference for mortgages by 15 basis points to 4.3 per cent. It is pertinent to note that LPR forms the basis on which most new and outstanding loans are paid. The rate is decided by a group of 18 banks. For a long time, it has been considered the facto benchmark funding of China. Read More: China to miss its year-end 5.5 per cent economic growth target Whenever an economy is in a downturn, the banks usually cut down the lending rates, which effectively reduces the interest rates on loans and mortgages. Low-interest rates mean that consumers will engage in more lending activities, thereby providing a kick to the economy. Credit demand has been at an all-time low in the Chinese market due to the sudden closure of cities and towns due to Covid. Why is China's growth story at a halt? As reported by WION, while countries across the globe are opening up their borders and economies after braving a pandemic, Beijing is employing draconian measures to keep up with its 'zero-Covid tolerance' policy. The strategy has been one of the primary reasons why China has lagged in its economic recovery. For months, the tough lockdown measures imposed by the Communist Party of China (CCP) led to a decrease in manufacturing as factories and offices were closed down for prolonged periods. Read More: China's economic growth drops to 0.4 per cent amid draconian lockdown measures and severe heatwave It hasn't helped the cause that mainland China is facing one of the most severe bouts of heatwave in recent memory. The intense heat has caused the Yangtze river to run dry while the electric grid faces the excruciating task of meeting growing power consumption demands. Earlier this week, Goldman Sachs cut China's growth forecast by 0.3 per cent from 3.3 per cent to 3 per cent. Meanwhile, Nomura lowered its projections from 3.3 per cent to 2.8 per cent. Read More: Dark clouds for China: Goldman Sachs and Nomura slash China's GDP outlook The downgrade comes on the heels of the Chinese economy growing by a tiny 0.4 per cent in the quarter while the Politburo giving up on the 5.5 per cent economic growth rate prediction by the year-end. (With inputs from agencies) WATCH WION LIVE HERE:

CPR for the economy? China cuts lending rates to drive credit demand

In the first interest rate cut in 18 months, the RBI Thursday shed its hawkish stance to reduce policy rates in the maiden policy meeting under new Governor Shaktikanta Das, a move that may make home and other loans cheaper.

Coming just months ahead of the general elections, the move will help boost lending and support the government's efforts to boost a slowing economy after it last week unveiled an expansionary budget which included a Rs 75,000 crore cash dole to small farmers and income tax rebate to the middle class.

The Reserve Bank of India's six-member monetary policy committee (MPC) cut the repo rate by 25 basis points to 6.25 per cent as inflation continues to remain benign.

While four out of the six members, including Das, voted for a reduction in interest rate, all the six members unanimously favoured switch in stance to 'neutral' from 'calibrated tightening' adopted in October.

Emboldened by a slowdown in inflation which fell to 18-month low of 2.19 per cent in December and is expected to be in the range of 3.2-3.4 per cent in April-September to 3.2-3.4 percent - lower than previous RBI prediction of 3.8-4.2 per cent range, Das-led MPC weighed more concern about economic growth risks, paving the way for more rate cuts.

Besides repo rate, reverse repo was reduced to 6 per cent from 6.25 per cent.

Repo rate is the rate at which commercial banks borrow money from the RBI; while reverse repo rate is the rate at which RBI collects money from banks.

Das, who unlike his predecessor Urjit Patel is seen more amenable to government demands for boosting credit growth, said it was "vital to act decisively and in a timely manner to address the objective of growth once price stability as defined (in RBI's inflation-targeting mandate) is achieved."

A former bureaucrat, Das was appointed RBI Governor in December as Patel quit amid a debate over central bank's autonomy.

"The shift in stance from calibrated tightening to neutral provides flexibility to address, and the room to address, sustained the growth of India's economy over the coming months as long as inflation remains benign," he said.

"RBI's decision to reduce the repo rate by 25 basis point from 6.5 per cent to 6.25 per cent and change of stance to 'Neutral' will give a boost to the economy, lead to affordable credit for small businesses, homebuyers etc and further boost employment opportunities," Finance Minister Piyush Goyal said in a tweet.

RBI last hiked interest rates in August 2018 by 0.25 per cent. It came on back of a similar increase in June. These hikes were the first since January 28, 2014, when rates were hiked by a similar proportion to 8 per cent.

In the subsequent years, RBI cut the interest rate on six occasions. In its last revision, on August 2, 2017, rates were cut by 25 basis points to 6 per cent.

"Investment activity is recovering, but supported mainly by public spending on infrastructure," the MPC said in a statement. "The need is to strengthen private investment activity and buttress private consumption."

Falling food prices have been the main driver of the inflation slowdown, though the core measure -- which excludes food and fuel costs -- remains elevated.

The RBI kept GDP growth forecast unchanged at 7.4 per cent for the next fiscal year starting April 1, 2019.

"Headline inflation is projected to remain soft in the near term reflecting the current low level of inflation and the benign food inflation outlook," the MPC statement said, adding that it needs to be watchful of vegetable prices, oil prices, trade tensions, health and education inflation, financial market volatility and monsoon outcomes.

The rate cut is in consonance with achieving the medium-term objective of maintaining inflation at the 4 per cent level while supporting growth, it said.

The RBI expects GDP growth to be at 7.4 per cent in FY20, which is up from the 7.2 per cent estimated for FY19 by the CSO.

It will set up an internal working group to examine issues pertaining to agricultural loans, including regional disparity and extent of coverage. It also raised the limit for collateral?free farm loans to Rs 1.6 lakh from the current Rs 1 lakh in view of overall inflation and a rise in agriculture input costs.

The resolution said recent unusual pick-up in the prices of health and education services could be a one-off phenomenon, adding that the crude oil price outlook remains broadly the same as in the December policy.

With the cash dole for farmers, the central government budget deviated marginally from the fiscal consolidation path by announcing a slip in FY19 and pegging the gap at a higher 3.4 per cent for FY20.

The government is also expecting the RBI to deliver an interim dividend for the second year running at Rs 28,000 crore, which is likely to be taken up for discussion at RBI's next board meeting.

On the regulatory policies front, the RBI proposed relaxations on foreign borrowings by companies undergoing insolvency resolutions to pay off the local lenders, redefined bulk deposits as those above Rs 2 crore from the earlier Rs 1 crore, align risk weights of bank loans to NBFCs with their ratings rather than a blanket 100 per cent earlier and also harmonise categories of NBFCs.&nbsp;

In the first interest rate cut in 18 months, the RBI Thursday shed its hawkish stance to reduce policy rates in the maiden policy meeting under new Governor Shaktikanta Das, a move that may make home and other loans cheaper.

In the first interest rate cut in 18 months, the RBI Thursday shed its hawkish stance to reduce policy rates in the maiden policy meeting under new Governor Shaktikanta Das, a move that may make home and other loans cheaper. Coming just months ahead of the general elections, the move will help boost lending and support the government's efforts to boost a slowing economy after it last week unveiled an expansionary budget which included a Rs 75,000 crore cash dole to small farmers and income tax rebate to the middle class. The Reserve Bank of India's six-member monetary policy committee (MPC) cut the repo rate by 25 basis points to 6.25 per cent as inflation continues to remain benign. While four out of the six members, including Das, voted for a reduction in interest rate, all the six members unanimously favoured switch in stance to 'neutral' from 'calibrated tightening' adopted in October. Emboldened by a slowdown in inflation which fell to 18-month low of 2.19 per cent in December and is expected to be in the range of 3.2-3.4 per cent in April-September to 3.2-3.4 percent - lower than previous RBI prediction of 3.8-4.2 per cent range, Das-led MPC weighed more concern about economic growth risks, paving the way for more rate cuts. Besides repo rate, reverse repo was reduced to 6 per cent from 6.25 per cent. Repo rate is the rate at which commercial banks borrow money from the RBI; while reverse repo rate is the rate at which RBI collects money from banks. Das, who unlike his predecessor Urjit Patel is seen more amenable to government demands for boosting credit growth, said it was "vital to act decisively and in a timely manner to address the objective of growth once price stability as defined (in RBI's inflation-targeting mandate) is achieved." A former bureaucrat, Das was appointed RBI Governor in December as Patel quit amid a debate over central bank's autonomy. "The shift in stance from calibrated tightening to neutral provides flexibility to address, and the room to address, sustained the growth of India's economy over the coming months as long as inflation remains benign," he said. "RBI's decision to reduce the repo rate by 25 basis point from 6.5 per cent to 6.25 per cent and change of stance to 'Neutral' will give a boost to the economy, lead to affordable credit for small businesses, homebuyers etc and further boost employment opportunities," Finance Minister Piyush Goyal said in a tweet. RBI last hiked interest rates in August 2018 by 0.25 per cent. It came on back of a similar increase in June. These hikes were the first since January 28, 2014, when rates were hiked by a similar proportion to 8 per cent. In the subsequent years, RBI cut the interest rate on six occasions. In its last revision, on August 2, 2017, rates were cut by 25 basis points to 6 per cent. "Investment activity is recovering, but supported mainly by public spending on infrastructure," the MPC said in a statement. "The need is to strengthen private investment activity and buttress private consumption." Falling food prices have been the main driver of the inflation slowdown, though the core measure -- which excludes food and fuel costs -- remains elevated. The RBI kept GDP growth forecast unchanged at 7.4 per cent for the next fiscal year starting April 1, 2019. "Headline inflation is projected to remain soft in the near term reflecting the current low level of inflation and the benign food inflation outlook," the MPC statement said, adding that it needs to be watchful of vegetable prices, oil prices, trade tensions, health and education inflation, financial market volatility and monsoon outcomes. The rate cut is in consonance with achieving the medium-term objective of maintaining inflation at the 4 per cent level while supporting growth, it said. The RBI expects GDP growth to be at 7.4 per cent in FY20, which is up from the 7.2 per cent estimated for FY19 by the CSO. It will set up an internal working group to examine issues pertaining to agricultural loans, including regional disparity and extent of coverage. It also raised the limit for collateral?free farm loans to Rs 1.6 lakh from the current Rs 1 lakh in view of overall inflation and a rise in agriculture input costs. The resolution said recent unusual pick-up in the prices of health and education services could be a one-off phenomenon, adding that the crude oil price outlook remains broadly the same as in the December policy. With the cash dole for farmers, the central government budget deviated marginally from the fiscal consolidation path by announcing a slip in FY19 and pegging the gap at a higher 3.4 per cent for FY20. The government is also expecting the RBI to deliver an interim dividend for the second year running at Rs 28,000 crore, which is likely to be taken up for discussion at RBI's next board meeting. On the regulatory policies front, the RBI proposed relaxations on foreign borrowings by companies undergoing insolvency resolutions to pay off the local lenders, redefined bulk deposits as those above Rs 2 crore from the earlier Rs 1 crore, align risk weights of bank loans to NBFCs with their ratings rather than a blanket 100 per cent earlier and also harmonise categories of NBFCs.

RBI cuts key lending rate by 25%, loans likely to get cheaper

Days ahead of RBI's monetary policy review, India's three major banks SBI, PNB and ICICI Bank today increased their benchmark lending rates or MCLR by up to 0.1 per cent, making loans costlier for consumers.

The new rates are effective from today.

India's largest lender SBI has increased the lending rate by 10 basis points across all tenors up to three years.

Now SBI's overnight and one-month tenors' Marginal Cost of Funds Based Lending Rate (MCLR) stands at 7.9 per cent as against 7.8 per cent, as per the SBI's website.

The MCLR for a three-year tenor increased to 8.45 per cent from 8.35 per cent earlier.

The state-owned Punjab National (PNB), the country's second largest lender, raised the MCLR for three-year and five-year tenors to 8.55 per cent and 8.7 per cent, respectively.

Country's second largest private bank ICICI Bank too said it has raised five-year tenor MCLR by 10 bps to 8.70 per cent. It has also raised the MCLR by 10 bps in loans with tenor of one year and three years.

However, lending rate remains unchanged in case of loans up to three months.

PNB has also increased the base rate to 9.25 per cent from the earlier 9.15 per cent.

Private sector bank ICICI Bank too has raised one-year MCLR by 10 bps to 8.40 per cent from today.

Other banks, sources said, were also likely to follow suit.

Most of home and auto loans are linked to MCLR.

Meanwhile, mortage lender HDFC said that it has increased its retail prime lending rate (RPLR), on which its adjustable rate home loans (ARHL) are benchmarked, by 10 basis points, effective tomorrow.

Karnataka Bank has raised its interest rates on deposits.

Interest on domestic and NRE rupee term deposits for a period of one year to two years stands revised to 7.25 per cent from 7.10 (for deposits up to Rs 10 crore) representing a hike of 15 basis points, it said in a regulatory filing.

The revised rates are effective from yesterday, it added.&nbsp

SBI, PNB and ICICI raised their benchmark lending rates by up to 0.1 per cent. The new rates are effective from Friday

Days ahead of RBI's monetary policy review, India's three major banks SBI, PNB and ICICI Bank today increased their benchmark lending rates or MCLR by up to 0.1 per cent, making loans costlier for consumers. The new rates are effective from today. India's largest lender SBI has increased the lending rate by 10 basis points across all tenors up to three years. Now SBI's overnight and one-month tenors' Marginal Cost of Funds Based Lending Rate (MCLR) stands at 7.9 per cent as against 7.8 per cent, as per the SBI's website. The MCLR for a three-year tenor increased to 8.45 per cent from 8.35 per cent earlier. The state-owned Punjab National (PNB), the country's second largest lender, raised the MCLR for three-year and five-year tenors to 8.55 per cent and 8.7 per cent, respectively. Country's second largest private bank ICICI Bank too said it has raised five-year tenor MCLR by 10 bps to 8.70 per cent. It has also raised the MCLR by 10 bps in loans with tenor of one year and three years. However, lending rate remains unchanged in case of loans up to three months. PNB has also increased the base rate to 9.25 per cent from the earlier 9.15 per cent. Private sector bank ICICI Bank too has raised one-year MCLR by 10 bps to 8.40 per cent from today. Other banks, sources said, were also likely to follow suit. Most of home and auto loans are linked to MCLR. Meanwhile, mortage lender HDFC said that it has increased its retail prime lending rate (RPLR), on which its adjustable rate home loans (ARHL) are benchmarked, by 10 basis points, effective tomorrow. Karnataka Bank has raised its interest rates on deposits. Interest on domestic and NRE rupee term deposits for a period of one year to two years stands revised to 7.25 per cent from 7.10 (for deposits up to Rs 10 crore) representing a hike of 15 basis points, it said in a regulatory filing. The revised rates are effective from yesterday, it added.

Banks raise lending rates, EMIs to get costlier

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