Punjab National Bank, Indian Bank and Bank of Baroda have raised their repo-linked lending rates by 25 basis points, with the revised rates effective 8 Oct 2026. The move follows the Reserve Bank of India’s 25-basis-point repo-rate increase to 5.50% and matters to vehicle buyers and existing borrowers whose car or two-wheeler loans are linked to an external benchmark.
Key takeaways
- PNB’s Repo Linked Lending Rate (RLLR) moved from 8.10% to 8.35% effective 8 Oct 2026; its MCLR and Base Rate were unchanged.
- Indian Bank’s repo-linked benchmark rose from 7.95% to 8.20%, while Bank of Baroda’s moved from 7.90% to 8.15%.
- Bank of India and Indian Overseas Bank also set their RBLR at 8.35%; Tamilnad Mercantile Bank raised its RLLR from 8.25% to 8.50%.
- An external-benchmark loan may see an EMI or tenure change at the applicable reset, but the effect depends on the loan agreement, outstanding balance and remaining term.
- A rate announcement is not the same as a uniform EMI increase: borrowers need to check the benchmark, spread, reset date and revised repayment schedule.
What changed on 8 October
Moneycontrol reported on 7 Oct 2026, citing lender disclosures, that several banks passed through the RBI’s 25-basis-point policy-rate increase. Mid-Day separately reported the same effective date and revised benchmark levels on 8 Oct 2026, also citing the banks’ filings. Aaj Tak’s 8 Oct report corroborated the lender-wise figures.
The change is clearest for loans priced against an external benchmark such as an RLLR or RBLR. The RBI policy rate provides the context, but each lender’s own benchmark, spread and reset terms determine what reaches a borrower’s account. PNB’s MCLR and Base Rate remaining unchanged is important because not every loan product responds in the same way on the same day.
| Lender | Benchmark | Earlier rate | Revised rate | Effective date |
|---|---|---|---|---|
| Punjab National Bank | RLLR | 8.10% | 8.35% | 8 Oct 2026 |
| Indian Bank | RBLR | 7.95% | 8.20% | 8 Oct 2026 |
| Bank of Baroda | Repo-linked rate | 7.90% | 8.15% | 8 Oct 2026 |
| Bank of India | RBLR | — | 8.35% | 8 Oct 2026 |
| Indian Overseas Bank | RBLR | — | 8.35% | 8 Oct 2026 |
| Tamilnad Mercantile Bank | RLLR | 8.25% | 8.50% | 8 Oct 2026 |
What it means for a car or two-wheeler loan
For an outstanding loan tied to an external benchmark, a higher lender rate can increase the interest due over the remaining repayment period. Depending on the lender’s process, the account may be adjusted through a higher EMI, a longer tenure, or a combination of the two. The first change may appear on the next scheduled reset rather than on the announcement date.
The same 25-basis-point movement will not produce one standard rupee increase for every borrower. The outcome depends on the principal still outstanding, the remaining tenure, the loan’s spread over the benchmark, the repayment frequency and the lender’s reset convention. A fixed-rate loan or a loan priced from MCLR or a Base Rate may follow different terms. Our fixed-versus-floating car-loan explainer covers why those benchmarks matter.
This is the latest pass-through after the RBI decision, following the earlier discussion of the RBI repo-rate move and car-loan EMI impact. It should be read as a lender-rate update, not as a promise that every vehicle-loan EMI will change immediately.
What borrowers should check now
A rate revision notice is most useful when matched against the terms in the individual loan account. Borrowers can check:
- the benchmark named in the sanction letter or loan agreement, and whether it is RLLR, RBLR, MCLR, Base Rate or a fixed rate;
- the revised benchmark and the date from which it applies;
- the lender’s spread or margin over that benchmark, including any product-specific conditions;
- whether the lender is recalculating the EMI, extending the tenure, or applying both changes;
- the updated amortisation schedule and the total interest remaining after the reset; and
- whether the notice matches the product terms, rather than assuming that a headline rate applies to every borrower profile.
For comparison, our earlier report on Bank of India’s RBLR revision shows why the benchmark name and effective date matter when reading lender announcements. Actual loan pricing and account-level changes vary by product, borrower profile and contract.
What to watch next
Moneycontrol reported that additional lenders could announce changes after the RBI move. That is a reported possibility, not a confirmed timetable. The practical signal for vehicle buyers and owners will be the rate notice and reset schedule issued by their own lender. A buyer comparing offers should record the benchmark, spread, reset frequency and total repayment terms alongside the headline interest rate.
Bottom line
PNB, Indian Bank and Bank of Baroda have now published higher repo-linked lending rates effective 8 Oct 2026, with other lenders also reporting revised benchmarks. For car and two-wheeler borrowers, the key question is not simply whether rates rose, but whether the loan is linked to the revised benchmark and how the lender’s reset mechanism changes the remaining repayment plan.
Sources
- Moneycontrol — Loans to get costlier as PNB, Indian Bank, Bank of Baroda and others raise rates after RBI repo-rate hike — 7 Oct 2026
- Mid-Day — Several PSU banks hike lending rates after RBI raises repo rate by 25 basis points — 8 Oct 2026
- Aaj Tak — Banks raise loan rates after RBI repo-rate hike; car and other loans may get costlier — 8 Oct 2026
- Punjab National Bank — Current financials and regulatory disclosures — accessed 8 Oct 2026
This article is for general information only and is not financial, insurance or legal advice.
