Latest news with #EBLR-linked
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Business Standard
7 days ago
- Business
- Business Standard
Sixty one per cent of floating rate loans linked to EBLR as of Dec 2024
Meanwhile, loans linked to marginal cost of funds based lending rate (MCLR) has reduced to 36 per cent as of December 2024, Reserve Bank of India (RBI) annual report revealed BS Web Team Around 61 per cent of the total loans are linked to an external benchmark while loans linked to marginal cost of funds based lending rate (MCLR) has reduced to 36 per cent as of December 2024, Reserve Bank of India (RBI) annual report revealed. The share of EBLR-linked loans in total outstanding floating rate loans of PSBs stood at 44.6 per cent, whereas it was 85.9 per cent for private sector lenders as at end-December 2024. The share of MCLR and other legacy rate loans was significantly higher in public sector banks as compared to private sector banks.
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Business Standard
29-05-2025
- Business
- Business Standard
Review of the monetary policy framework on RBI's agenda for FY26
The review of the monetary policy framework and studying the optimal level of liquidity in the banking system which is needed for monetary policy transmission are the key agendas for the central bank in the current financial year, the Reserve Bank of India (RBI) said in its annual report for 2024-25 released on Thursday. The government, in consultation with the RBI, determines the inflation target in terms of the headline CPI inflation once in five years. On March 31, 2021, the Central government retained the inflation target (4 per cent) and the tolerance band (+/-2 per cent on either side) for the next 5-year period, that is April 1, 2021 to March 31, 2026. The review assumes significance in view of the recent commentary from various quarters, including the economic survey, which called for setting core inflation, that is headline inflation minus food and fuel, as the target for the central bank in view of heightened volatility of food prices. 'Higher food prices are, more often, not demand-induced but supply-induced. Short-run monetary policy tools are meant to counteract price pressures arising out of excess aggregate demand growth,' the Economic Survey had said, while arguing for re-examining the framework. The annual report noted that the external benchmark linked rate (EBLR) regime has strengthened and quickened the pace of transmission. 'The proportion of EBLR-linked loans in outstanding floating rate rupee loans of SCBs increased further during 2024-25. Concomitantly, the share of the MCLR-linked loans fell during the year,' the report said. The six-member monetary policy committee has reduced the policy repo rate by a cumulative 25 bps since February. The central bank has pumped in ample liquidity in the system with an aim to increase monetary transmission. RBI governor Sanjay Malhotra has indicated that RBI will keep the system liquidity with 1 per cent surplus of banks' net demand and time liabilities. 'I again reiterate that we will provide sufficient liquidity for the purposes of monetary policy transmission. I do not want to give a number, really, as to what kind of a surplus, but sufficiently in surplus. And you mentioned linking it to NDTL. Well, yes, that is the kind of number, about 1 per cent or so, in the surplus range, now that we are on the easing cycle. That is the kind of number that we will be looking at, and we will keep it sufficiently surplus,' said the RBI Governor Sanjay Malhotra in a post policy press conference in April. As of May 2025, system liquidity averaged around ₹1.6 trillion, or 0.7 per cent of Net Demand and Time Liabilities (NDTL), and is projected to rise to approximately ₹5 trillion, or 2 per cent of NDTL, by the end of August. Loans linked to external benchmarks such as the repo rate reflected the cut almost immediately, the Marginal Cost of Funds-based Lending Rate (MCLR)-- which was closely tied to banks' deposit costs-- adjusted more slowly, delaying the broader transmission of the rate cut. As per the latest RBI data, net system liquidity stood at a surplus of ₹1.91 trillion as of Wednesday.
Mint
14-05-2025
- Business
- Mint
City Union Bank share price soars 2% to reach highest level since December 2022, gains 10% in May
City Union Bank's share price extended its winning streak for the third straight day on Wednesday, May 14, gaining another 2% in trade to touch a 28-month high of ₹ 195 apiece. The stock last traded at these levels in December 2022. With the steady rise, shares are now approaching their record high of ₹ 249.35, last seen in January 2020. The stock has maintained a consistent upward trend since the beginning of May, as investor sentiment improved following the lender's return to a growth trajectory in the March quarter. This recovery was driven by its ongoing digital transformation efforts, which also prompted brokerages to raise their target multiples, further fueling the rally. Notably, the stock ended both April and March in the green, with gains of 12.33% and 6.35%, respectively. The rally has extended into the current month, with the stock rising another 10% so far. Following the bank's in-line performance, Axis Securities revised its target price on City Union Bank to ₹ 225 apiece, maintaining its 'Buy' rating. Likewise, IDBI Capital retained its 'Buy' rating with a target price of ₹ 215. Anand Rathi also maintained a 'Buy' with a 12-month target of ₹ 218, while Prabhudas Lilladher raised its target to ₹ 210 from ₹ 200, reiterating its 'Buy' stance. City Union Bank reported a 13% YoY increase in net profit to ₹ 288 crore for the quarter ended March 2025, driven by stronger fee income, particularly from insurance and processing charges. Net Interest Income (NII) rose 10% YoY to ₹ 600 crore, while Net Interest Margins (NIMs) improved marginally by 2 basis points, as the bank shed lower-yielding loans. Pre-provision operating profit surged 25.3% YoY to ₹ 441 crore. Credit costs remained largely stable at 60 basis points, compared to 61 bps in the previous quarter. Non-interest income saw robust growth of 43% YoY to ₹ 251 crore, supported by strong fee-based revenues. On the asset quality front, gross NPA improved to 3.09% from 3.36% QoQ, driven by higher write-offs. Management remains confident of further improvement in asset quality, supported by controlled slippages and healthy recoveries. For FY26, slippages are expected to decline to ₹ 650–700 crore, compared to ₹ 815 crore in FY25. Looking ahead, the bank aims to maintain the business momentum it has gained in FY25 while targeting a sustainable Return on Assets (RoA) of 1.5%. Axis Securities highlighted potential NIM pressures in the coming quarters due to yield compression in the EBLR-linked loan book. However, the brokerage believes that the impact will be cushioned by multiple initiatives undertaken by the bank to offset margin declines. Axis expects City Union Bank to deliver consistent RoA and RoE of 1.5–1.6% and 12–14%, respectively, over FY26–27E, supported by strengthening fee income, steady NIMs, and controlled credit costs despite higher operational expenses. Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.
Economic Times
02-05-2025
- Business
- Economic Times
Interest rates are falling, time to switch your home loan regime: Save above Rs 8 lakh by switching to EBLR; Know how
What is EBLR? Live Events How much savings in monthly home loan EMI can you expect after switching to EBLR rate? Home loan's outstanding balance: Rs 30 lakh Remaining tenure of the home loan: 15 years EBLR EMI at 8.65%: Rs 29,807 Table showing the calculation of home loan EMI savings on switching to EBLR Interest Rate Regime MCLR BPLR Base rate Existing interest rate 9% 11.15% 10.40% Current EMI Rs 30,428 Rs 34,381 Rs 32,976 Monthly savings by shifting to EBLR Rs 621 Rs 4,574 Rs 3,170 Annual savings by shifting to EBLR Rs 7,457 Rs 38,036 Rs 32,976 Total Savings during repayment Rs 1,11,859 Rs 5,70,540 Rs 8,23,402 What are the charges which bank levy for such a shift in interest rate regime and generally how long does it take for such a request to process? Interest rates have started falling recently, with most of the lenders reducing their interest rates after the Reserve Bank of India (RBI) cut the repo rate by 0.5% within a span of two months. The lower interest rates will result in huge savings for home loan borrowers, as their home loan EMI will come down. If they decide to pay the same EMI amount, despite a rate cut, their home loan will be repaid much faster, and they will save a good amount on interest. However, not all home loan borrowers will benefit equally. The benefit of these cuts depends on their interest rate the biggest question is: which interest rate regime will offer you lower home loan EMIs? There are four interest rate regimes, which vary based on the timing of your home loan acquisition. Borrowers who secured their home loans before 2010 had the option to take them on the BPLR rate, and those who took their home loans between July 1, 2010, and March 31, 2016, had to take them on the base rate. Similarly, those who took their home loans between April 1, 2016, and September 30, 2019, had to take them on a Marginal Cost of Funds-based Lending Rate (MCLR). However, from October 1, 2019, the External Benchmark Lending Rate (EBLR) replaced MCLR. So, the question arises—which interest rate regime (BBLR, base rate, MCLR or EBLR) can make the case for a lower home loan interest cost and thus a lower home loan EMI?Read below to find out how much money you can save by switching interest rate to or External Benchmark Lending Rate, is a framework used by banks in India to set interest rates on home loans, where the rates are directly linked to an external benchmark, such as the RBI's repo rate. This means that when the RBI adjusts its repo rate, EBLR-linked loan rates can also who took out a home loan before EBLR have to pay a higher home loan EMI. This is because the EBLR rate is considered one of the most competitive rates amongst all regimes, and now it offers one of the lowest interest rates after the RBI cut the repo rates twice by 0.25% in its last two monetary policy Kumar, a SEBI-registered RIA and Founder of SahajMoney, says, 'EBLR is directly linked to the RBI's repo rate (6.00% (repo rate) + 2.65% spread), making it more transparent and reflective of interest rate scenarios.'While EBLR was launched, banks offered all existing borrowers the option to switch to EBLR; however, not all borrowers exercised that you are among them, then chances are that you would still be paying a higher interest rate on your home loan. It is the time to check the interest rate on your home loan and take action to save on the interest amount that you are paying just because of being to CEO Adhil Shetty, the older benchmark rates are stickier in comparison to BPLR. 'Around 40% of all floating rate bank loans are still on MCLR and BPLR, where the rates may be much higher compared to repo-linked loans. So, it's advisable to speak to your bank and convert your loan to a repo-linked one,' he home loan interest rates are falling, calculations show that it is beneficial for borrowers to shift to EBLR rate if their home loan is under MCLR or base rate or BPLR per the calculations, if the EMI on EBLR rate (8.65%) is Rs 29,807 then you can save up to 38,036 in a year in comparison with BPLR. In comparison with MCLR you can save up to Rs 7,457 in a SahajMoneyAssumptions:1. BPLR rate is after 4% discount by bank2. In EBLR there are 2 additional charges CRP (Credit Risk Premium) and BSP (Business Strategic Premium) that change with credit profile and with product. We have considered only 8.65% without CRP and BSP.3. EBLR stays constant at 8.65% and other interest rates does not can change your home loan interest rate regime any day you wish as your bank will process your request if you apply to switch your home loan to Sharma, Founder- Radian Finserv, says, "Banks typically charge a nominal conversion or administrative fee, around Rs. 5000 + GST. The shift usually takes 7 to 15 working days, depending on the bank's internal process and borrower documentation. It's a one-time cost that can result in long-term savings."Shetty agrees with Sharma and says if you are converting your loan with the same bank, you are usually charged a processing fee. The turnaround time for this conversion is generally a few days and usually there is no paperwork involved since the property's documents are already with the when transferring home loan to another bank and converting it into EBLR can mean incurring a cost of 0.5% to 1% of the loan says transferring your loan to a new bank makes sense where there's a substantial discount in interest rates being offered along with other benefits like easier pre-payment terms.'The cost of a transfer is usually 0.5-1% of the loan. The costs include processing fee, legal fees, MOD charges, and pre-EMI interest on the new loan, and pre-closure costs (such as simple interest or pre-closure fees) on the old loan. You will easily recover the costs in a year if the rate difference is substantial. The Turnaround time is typically a fortnight, but may get lengthier if the bank insists on additional scrutiny,' says Shetty.
Time of India
02-05-2025
- Business
- Time of India
Interest rates are falling, time to switch your home loan regime: Save above Rs 8 lakh by switching to EBLR; Know how
What is EBLR? Live Events How much savings in monthly home loan EMI can you expect after switching to EBLR rate? Home loan's outstanding balance: Rs 30 lakh Remaining tenure of the home loan: 15 years EBLR EMI at 8.65%: Rs 29,807 Table showing the calculation of home loan EMI savings on switching to EBLR Interest Rate Regime MCLR BPLR Base rate Existing interest rate 9% 11.15% 10.40% Current EMI Rs 30,428 Rs 34,381 Rs 32,976 Monthly savings by shifting to EBLR Rs 621 Rs 4,574 Rs 3,170 Annual savings by shifting to EBLR Rs 7,457 Rs 38,036 Rs 32,976 Total Savings during repayment Rs 1,11,859 Rs 5,70,540 Rs 8,23,402 What are the charges which bank levy for such a shift in interest rate regime and generally how long does it take for such a request to process? The interest rate has started falling as most of the lenders started reducing their interest rate after RBI cut the repo rate by 0.5% within a span of two months. It will deliver a huge saving for home loan borrowers as their home loan EMI will come down. If home loan borrowers decide to pay the same EMI despite a rate cut, their home loan will be repaid much faster and they will end up saving a good amount of interest. However, not all home loan borrowers will benefit equally. The advantage that they will get from these cuts will depend upon the interest rate regime to which they of the biggest questions is which interest rate regime can give lower home loan EMIs. This is because there are four interest rate regimes, depending upon when you took the home loan. In the case of home loan borrowers who took home loans before 2010, they had the option to take it on BPLR rate, those who took home loan after July 1, 2010 and till 31 March 2016, had to take the loan on base rate. Similarly those who took home loan on or after April 1, 2016 till September 30, 2019 had to take it on MCLR. From October 1, 2019, MCLR was replaced by EBLR. So a question can come to mind about which interest rate regime (BBLR, base rate, MCLR or EBLR) can make the case for a lower home loan's interest cost and thus lower home loan below to find out how much money you can save by switching interest rate to (External Benchmark Lending Rate) is a framework used by banks in India to set interest rates on home loans, where the rates are directly linked to an external benchmark, such as the RBI repo rate. This means that when the RBI adjusts its repo rate, EBLR-linked loan rates can also who took out a home loan before EBLR, have to pay a higher home loan EMI. This is because the EBLR rate is considered one of the most competitive rate amongst all regimes and it now offers one of the lowest interest rates after the Reserve Bank of India (RBI) cut the repo rates twice by 0.25% in its last two monetary policy Kumar, SEBI RIA, founder of SahajMoney, says: 'EBLR is directly linked to the RBI's repo rate (6.00% (repo rate) + 2.65% spread), making it more transparent and reflective of interest rate scenarios.'While EBLR was launched the banks offered an option to all old borrowers to switch to EBLR however not all borrowers exercised that to Adhil Shetty - CEO - 'The older benchmark rates are stickier in comparison to BPLR. Around 40% of all floating rate bank loans are still on MCLR and BPLR where the rates may be much higher compared to repo-linked loans. So it's advisable to speak to your bank and convert your loan to a repo-linked one.'If you are among them then chances are that you would still be paying a higher interest rate on your home loan. It is the time when you check your home loan interest rate and take action to save interest amount that you are paying just because of being home loan interest rates are falling, calculations show that it is beneficial for borrowers to shift to EBLR rate if their home loan is under MCLR or base rate or BPLR per the calculations, if the EMI on EBLR rate (8.65%) is Rs 29,807 then you can save up to 38,036 in a year in comparison with BPLR. In comparison with MCLR you can save up to Rs 7,457 in a SahajMoneyAssumptions:1. BPLR rate is after 4% discount by bank2. In EBLR there are 2 additional charges CRP (Credit Risk Premium) and BSP (Business Strategic Premium) that change with credit profile and with product. We have considered only 8.65% without CRP and BSP.3. EBLR stays constant at 8.65% and other interest rates does not can change your home loan interest rate regime any day you wish as your bank will process your request if you apply to switch your home loan to says if you're converting your loan with the same bank, you are usually charged a processing fee. The turnaround time for this conversion is generally a few days and usually there is no paperwork involved since the property's documents are already with the agrees with Shetty and adds: 'Some banks may charge processing fees ranging from 0.5% to 1% of the outstanding loan amount for regime conversion.'However when transferring home loan to another bank and converting it into EBLR can mean incurring a cost of 0.5% to 1% of the loan says transferring your loan to a new bank makes sense where there's a substantial discount in interest rates being offered along with other benefits like easier pre-payment terms.'The cost of a transfer is usually 0.5-1% of the loan. The costs include processing fee, legal fees, MOD charges, and pre-EMI interest on the new loan, and pre-closure costs (such as simple interest or pre-closure fees) on the old loan. You will easily recover the costs in a year if the rate difference is substantial. The Turnaround time is typically a fortnight, but may get lengthier if the bank insists on additional scrutiny,' says Shetty.
