# What is a Lending Rate?

#### What is lending rate?

Lending rate or interest rate is the amount charged by lenders for a certain period as a percentage of the amount lent or deposited. The total interest on the amount or the principal sum is determined by the duration of time over which the amount is deposited or lent.
Most loans use simple interest. However, some also use compound interest, which includes interest on the principal amount as well as on the previously accumulated interests.

Low risk loans are usually charged low interest rates while loans which are considered as high risk are charged higher interest rates.
Risk is determined by looking at the credit score of the borrower. Therefore, it is important to have a good credit score to avail the best loans possible.
Interest rates are applied to most transactions which involve lending or borrowing. Loans are taken by individuals to buy homes, properties, vehicles, education or to fund businesses. Usually the borrowed money is repaid through periodic installments or through lump sum at a predetermined time.
The money repaid is higher than the money lent or deposited to compensate for the loan period.

#### How is simple interest calculated?

Simple interest is the interest charged on the principal amount lent or borrowed for a particular period of time. The interest is charged on the principal amount as a percentage of the amount.
Simple Interest = Principal * Interest rate * Time
For example, if the money lent was Rs 1,000 for a period of one year at a simple interest rate of 8%, then the interest payment will be 1000*8*1 which is equal to Rs 8,000.

#### What are the factors that influence interest rates?

Here are some of the factors that determine the interest rates
1. The term for the maturity of the investment
2. Government’s directive to the central bank

## CSB Bank Q1 results: Profit falls 14% to Rs 113 cr due to rise in bad loans

The private sector lender had earned a net profit of Rs 132 crore in the year-ago period

Updated On : 29 Jul 2024 | 3:51 PM IST

## Banks' lending rate hit 46-month high in Jan; for fresh deposits in Aug

The weighted average lending rate by scheduled commercial banks on fresh loans increased to 9.45 per cent in January 2024 compared to 9.32 per cent in December 2023

Updated On : 08 Mar 2024 | 8:32 PM IST

## Lending risks

Interconnectedness must be watched carefully

Updated On : 27 Nov 2023 | 9:38 PM IST

## Monetary policy review: RBI holds rates steady as inflation looms large

Repo rate remains at 6.5%; FY24 inflation forecast up at 5.4%; surprise incremental CRR move to drain out over Rs 1 trillion

Updated On : 10 Aug 2023 | 11:21 PM IST

## LIC Housing Finance raises lending rates by 35 bps, cites market conditions

'Good sustenance in home buying', says mortgage lender in statement

Updated On : 26 Dec 2022 | 4:56 PM IST

## Bank of Baroda hikes MCLR up to 30 basis effective December 12

The revised rates will be effective from December 12

Updated On : 09 Dec 2022 | 10:18 PM IST

## Fintech lenders align business model with RBI's digital lending norms

The RBI came out with the guidelines on digital lending in September and gave time until November 30 for players to comply with the 'existing loan' category

Updated On : 30 Nov 2022 | 9:09 PM IST

## MPC after-effect: SBI, ICICI Bank, YES Bank, BoI raise lending rates

The hike in lending rates shall be applicable to home loans and consequently, equated monthly instalment payments made by customers.

Updated On : 03 Oct 2022 | 10:05 PM IST

## Comply with digital lending norms for existing loans by Nov 30: RBI

Guidelines applicable to new and existing customers taking fresh loans

Updated On : 02 Sep 2022 | 11:17 PM IST

## LIC Housing Finance hikes prime lending rate by 50 basis point to 8%

LIC Housing Finance increased its Prime Lending Rate by 50 basis points. With this the new interest rates on home loans will now start from 8 per cent as against 7.50 per cent earlier.

Updated On : 22 Aug 2022 | 2:27 PM IST

## Loan disbursements for Paytm up nine-fold to over Rs 5,550 crore

The number of loans disbursed through our platform grew 492% y-o-y to 8.5 million loans in the quarter ending June 2022, while the value of loans disbursed grew 779% y-o-y to Rs 5,554 crore (\$703 mn)

Updated On : 12 Jul 2022 | 1:20 AM IST

## Bank of Maharashtra bucks the trend, cuts MCLR by 20-35 basis points

The state-owned lender cut overnight and one-month MCLR by 25 bps to 6.90 per cent and 7 per cent

Updated On : 11 Jul 2022 | 11:07 PM IST

## Average US mortgage rates show biggest single week jump in 35 years

Average long-term US mortgage rates had their biggest one-week jump in 35 years with the Federal Reserve this week raising its key rate by three-quarters of a point in bid to tame high inflation.

Updated On : 16 Jun 2022 | 9:22 PM IST

## Indian Overseas Bank hikes repo based lending rate to 7.25% from May 10

Several banks have revised their lending rates based on repo and marginal cost of funds

Updated On : 09 May 2022 | 9:03 PM IST

## SBI hikes lending rate by 0.1% across all tenures; EMIs to go up

The lending rate revision by SBI is likely to be followed by other banks in the days to come

Updated On : 19 Apr 2022 | 12:25 PM IST

## RBI's MPC is expected to begin raising key lending rate from April

The MPC of the central bank maintained the repo rate, or short-term lending rate, for commercial banks, at 4 per cent

Updated On : 12 Feb 2022 | 3:31 PM IST

## Banking stocks end with gains after RBI leaves key lending rate unchanged

The highest gainer was Federal Bank Ltd, which rallied 2.2% to end at Rs 104.4

Updated On : 10 Feb 2022 | 5:34 PM IST

## India's largest lender SBI increases benchmark lending rate by 0.1%

State Bank of India (SBI) has increased benchmark lending rate or base rate by 0.1 per cent, a move that may be followed by other lenders.

Updated On : 17 Dec 2021 | 11:16 AM IST

## Punjab National Bank cuts repo-based lending rate by 25 bps to 6.55%

State-owned Punjab National Bank (PNB) on Friday said it has slashed the repo-based lending rate by 25 basis points (bps) to 6.55 per cent.

Updated On : 17 Sep 2021 | 5:13 PM IST

## HDFC enhances existing limit to borrow via medium-term bonds up to \$2.8 bn

The country's largest mortgage lender HDFC Ltd on Wednesday said it has enhanced its existing limit to raise capital through medium-term notes to up to USD 2.8 billion (about Rs 20,875.65 crore).

Updated On : 28 Jul 2021 | 11:26 PM IST