Personal loan interest rates: In the past few months, private lenders such as ICICI Bank, Kotak Mahindra Bank, HDFC Bank and Axis Bank have increased interest rates on personal loans (PL) after the Reserve Bank of India (RBI) deemed personal loans high risk in November 2023, according to a report by Economic Times.
Citing bank disclosures, the report said interest rates on personal loans had increased by 30-50 basis points (bps).
In November last year, the central bank expressed some concerns about excessive growth in unsecured personal lending and had increased the risk weighting of personal loans to encourage lenders to be more cautious and not make excessive such loans.
The RBI has increased risk weighting for personal loans to 125% from 100% in November 2023. For credit card loans, it has been increased to 150% from 125%.
Let's take a look at the new interest rates for personal loans from banks –
–ICICI Bank has now increased interest rates on personal loans to 10.80% from the previous 10.50%.
– Kotak Mahindra Bank is offering personal loans at interest rates ranging from 10.99 per cent, up from 10.50 per cent at the end of last year.
–HDFC Bank's interest rate on personal loans has been at 10.75 per cent per annum since April, compared to 10.35 per cent in January-March this year.
– Axis Bank is offering personal loans at an interest rate of 10.99% compared to 10.49% at the time of RBI risk announcement.
Retail lending growth slowed to 17.8 per cent in May 2024 from 19.1 per cent in May 2023, according to RBI data.
Credit growth for unsecured personal loans, such as “outstanding credit cards,” declined from 34.2% in November 2023 to 23% in April 2024.
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