New Delhi, July 7: India's largest lender State Bank of India today increased lending rates by 25 basis points and raised deposit rates by up to 100 basis points, a move that will make home, auto and other loans more expensive, but will provide better returns to savers.
The bank has revised the base rate or the minimum lending rate upwards by 25 basis points (bps), or 0.25 per cent, to 9.50 per cent with effect from July 11, SBI said in a statement.
The interest rates on fixed deposits with a maturity period of 1-10 years has been fixed at 9.25 per cent. The new deposit rates would be effective from July 11.
The bank has also raised its benchmark prime lending rate (BPLR), used to determine floating interest rate loans, have been increased to 14.25 per cent from 14 per cent.
The decision follows the rate hike announced by the Reserve Bank in its policy review last month. Several banks, including major private lender ICICI Bank, Canara Bank, Bank of Baroda, have already raised their lending rates.
According to the statement, deposits up to 90 days will fetch an interest rate of 7 per cent as against 6.25 per cent. The interest rates for fixed deposits with a maturity period of 1-10 years would be 9.25 per cent.
Current deposits between 1 year and 554 days earn an interest of 8.25 per cent. SBI has also decided to waive the penalty for premature withdrawal of deposits up to 90 days. For premature withdrawal of other deposits, it reduced the penalty to 0.50 per cent from from 1 per cent.
The RBI hiked key short-term lending and borrowing rates by 25 basis points (0.25 per cent) each with immediate effect to tackle inflation. The short-term lending (repo) rate rose to 7.5 per cent and the borrowing (reverse repo) rate to 6.5 per cent.
Last week, besides ICICI Bank, other public sector lender Indian Overseas Bank, Corporation Bank and Dena Bank also hiked their base rate by 25 basis points each.
While other banks have raised only the lending rates, SBI is the first bank to announce a hike in both lending and deposit rates. PTI