Private lenders such as ICICI Bank, Kotak Mahindra Bank, HDFC Bank and Axis Bank have raised interest rates on personal loans over the last few months after the Reserve Bank of India (RBI) termed them riskier in November 2023.

The personal loan rates were increased by 30-50 basis points (bps), Economic Times reported citing data from the disclosures of the banks.

In November last year, the RBI had raised the risk weightage of personal loans to 125% from 100%. For credit card loans, it was increased from 125% to 150%. The central bank’s decision was taken to discourage lenders from taking high exposures on personal loans. The unsecured retail loans had seen rapid growth to make the RBI uncomfortable.

A peep into new personal loan interest rates of banks: 

–ICICI Bank now offers personal loan at 10.80% interest rate, up from 10.50% earlier.

–Kotak Mahindra Bank’s personal loan interest rates start from 10.99%, up from 10.50% at the end of last year.

–HDFC Bank’s personal loan interest rate is at 10.75% per annum since April, compared to 10.35% between January and March this year.

–Axis Bank offers personal loan at interest rate of 10.99%, up from 10.49% at the time of the RBI’s risk announcement.