With rise in benchmark prime lending rates by various banks, home, car, education and personal loan rates have gone up in many banks. The rate increase occurred due to the policy rate increase by Reserve Bank of India in the monetary policy review.
Analysts anticipate that the policy rates are expected to shoot up further in the subsequent quarterly review of monetary policy set to take place in September.
Banks have switched over to the base rate method of lending thus ending the BPLR system. In order to make customers accept the base rate system, banks have increased BPLR rates thus making loans expensive.
Personal loans already have high rates of interest. The news of rate increase has become a reason of worry for borrowers particularly those whose loan is in the floating form as rates have increased still more for them.
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