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Personal Finance News

RBI rate hike bites: PNB, BoB among banks raising lending rates in October, making loans costlier

image Sangeeta Ojha
By Sangeeta Ojha

2 min read | Updated on October 08, 2026, 07:44 IST

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SUMMARY

The RBI on Wednesday raised the repo rate by 25 basis points to 5.50 per cent, marking its first rate increase in nearly four years.

RBI rate hike bites

More banks are expected to revise their lending rates following the RBI’s decision.

Several major banks, including Punjab National Bank, Indian Bank and Bank of Baroda, have raised their lending rates following the Reserve Bank of India’s decision to increase the benchmark repo rate, making borrowing more expensive for customers.
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The RBI on Wednesday raised the repo rate by 25 basis points to 5.50 per cent, marking its first rate increase in nearly four years. The central bank also shifted its policy stance to “calibrated tightening”, signalling that further rate hikes could be on the table as inflation remains a concern and the rupee faces pressure.

The six-member Monetary Policy Committee (MPC) unanimously voted in favour of the rate increase. It was the first repo rate hike since Sanjay Malhotra took charge as RBI Governor in December 2024.

Following the RBI’s decision, Punjab National Bank (PNB) revised its Repo Linked Lending Rate (RLLR) to 8.35 per cent from 8.10 per cent, effective October 8. The revised rate includes a Business Strategic Premium (BSP) of 0.35 per cent. PNB, however, said its Marginal Cost of Lending Rate (MCLR) and Base Rate would remain unchanged.

Indian Bank also raised its Repo Linked Benchmark Lending Rate (RBLR) to 8.20 per cent from 7.95 per cent. The revised rate will take effect from October 8.

Similarly, Bank of Baroda (BoB) increased its Repo Based Lending Rate by 25 basis points to 8.15 per cent from 7.90 per cent.

Bank of India (BoI) and Indian Overseas Bank (IOB) also raised their Repo Based Lending Rates to 8.35 per cent, with the new rates effective October 8.

Among private sector lenders, Tamilnad Mercantile Bank increased its Repo Linked Lending Rate to 8.50 per cent from 8.25 per cent.

The increase in benchmark lending rates is expected to raise borrowing costs for customers with loans linked to the repo rate, including some home, personal and other retail loans.

More banks are expected to revise their lending rates following the RBI’s decision.

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About The Author

image Sangeeta Ojha
Sangeeta Ojha is a business and finance journalist with experience across leading media platforms like Mint and India Today. She has built a reputation for covering a wide range of personal finance topics, including income tax, mutual funds, insurance, savings and investing.

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