SBI raises base rate: SBI raises base rate, increases EMI burden, will the era of cheap loans end?

News Desk, Amar Ujala, New Delhi

Published by: Surendra Joshi
Updated to Thursday, 16 December 2021 07:56 PM IST

Summary

Earlier in September, SBI had cut its base rate by five basis points to 7.45 per cent. It rose 10 points after the Reserve Bank of India announced its new monetary policy.

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SBI, the country’s largest public sector bank, has hiked its basic interest rate by 10 basis points. Now the SBI base rate has risen to 7.55 per cent. This can increase the burden on EMI payers. There is also speculation that the era of cheap credit in the country is now coming to an end with this hike.

Earlier in September, SBI had cut its base rate by five basis points to 7.45 per cent. It rose 10 points after the Reserve Bank of India announced its new monetary policy. At its meeting on December 8, the Reserve Bank decided not to make any changes in policy rates. The RBI kept the repo rate at 4 per cent and the reverse repo rate at 3.35 per cent. After this, it was now feared that banks could raise interest rates on their own scale. SBI launched it on Thursday.

The interest rate has been increased on more than two crore FDs
SBI raises interest rates on fixed deposits (FDs) However, only large customers will benefit from this as the interest rate has been increased only on FDs above Rs two crore.
The base rate is also an indicator of the economy. With the SBI hike, it seems that the era of cheap loans in the country is now coming to an end. Other banks can now raise the base rate similar to SBI. The base rate hike will also have an impact on bank lending. Interest rates on loans may rise.

Hence the risk of rising interest rates
Crude oil prices, which fell to $ 65 a barrel earlier this month, rose again to $ 72 a barrel on December 16. This indicates an increase in world oil demand. Concerns are also growing about the omicron virus, but if it does not spread further and can be controlled, global demand could increase. A sharp rise in the wholesale price index could also have an impact on interest rates.

What is the base rate
This is the minimum interest rate that the bank pays to its customers. This can affect customers who have taken home and other loans at floating interest rates, i.e. variable rates. They will have to pay more EMI or their loan term will increase, i.e. they will have to pay EMI longer.

Range

SBI, the country’s largest public sector bank, has hiked its basic interest rate by 10 basis points. Now the SBI base rate has risen to 7.55 per cent. This can increase the burden on EMI payers. There is also speculation that the era of cheap credit in the country is now coming to an end with this hike.

Earlier in September, SBI had cut its base rate by five basis points to 7.45 per cent. It rose 10 points after the Reserve Bank of India announced its new monetary policy. At its meeting on December 8, the Reserve Bank decided not to make any changes in policy rates. The RBI kept the repo rate at 4 per cent and the reverse repo rate at 3.35 per cent. Following this, banks now feared that they might raise interest rates on their own scale. SBI launched it on Thursday.

The interest rate has been increased on more than two crore FDs

SBI raises interest rates on fixed deposits (FDs) However, only large customers will benefit from this as the interest rate has been increased only on FDs above Rs two crore.

The base rate is also an indicator of the economy. With the SBI hike, it seems that the era of cheap loans in the country is now coming to an end. Other banks can now raise the base rate similar to SBI. The base rate hike will also have an impact on bank lending. Interest rates on loans may rise.

Hence the risk of rising interest rates

Crude oil prices, which fell to $ 65 a barrel earlier this month, rose again to $ 72 a barrel on December 16. This indicates an increase in world oil demand. Concerns are also growing about the Omicron virus, but if it does not spread further and can be controlled, global demand could increase. A huge increase in the wholesale price index could also have an impact on interest rates.

What is the base rate

This is the minimum interest rate that the bank pays to its customers. This can affect customers who take out home and other loans at floating interest rates, i.e. variable rates. They will have to pay more EMI or their loan term will increase, i.e. they will have to pay EMI longer.

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