State Bank of India, the country's largest lender, on Monday raised benchmark lending rate by 50 basis points to 12.25 per cent, making home, vehicle and other corporate loans linked with the rate costlier to existing borrowers.
However, for new borrowers the base rate, which became effective from July 1 this year, stands at 7.5 per cent. The state-run lender also increased its fixed deposit rates by up to 150 basis points across various maturities. The decision comes days after the Reserve Bank of India increased its key rates to control rising prices.
"The bank has revised the benchmark prime lending rate upwards by 50 basis points from 11.75 per cent p.a. to 12.25 per cent p.a. effective from August 17," SBI said a filing to the Bombay Stock Exchange.
As far as revision in fixed deposit rates is concerned, SBI increased interest rate by 1.5 per cent to 4 per cent per annum for the term deposit with maturity between 15 to 45 days. This is the highest increase done by the bank among various maturity term deposits.
For fixed deposit between 181 days to less than 1 year, the new interest rate will be 6 per cent against existing 5.25 per cent, while 555 days fixed deposit rate will attract interest rate of 7.25 per cent an increase of 1.25 per cent.
The term deposit rate between 3 years to 5 years will go up by 75 bps to 7.25 per cent from tomorrow, while 5 years to 8 years maturity slab is increased by 25 bps to 7.50 per cent.
Meanwhile the bank also announced launch of floating fixed deposit product linked with base rate with effect from September 6, 2010. "The bank announced launching of floating rate term deposit products linked to 'Base Rate' effective from September 6, 2010," SBI said in the filing.
Base rate is the lowest lending rate below which the bank cannot give loan to any customer. For one year floating fixed deposit the interest rate will be 50 basis points (bps) lower than the existing base rate which is currently at 7.5 per cent, it added.
For three years (floating) term deposit the interest rate will be 25 bps lower than the base rate. While for the 5 years floating fixed deposit the interest rate will be at base rate. The RBI, in its monetary review last month, raised the short-term borrowing (reverse repo) rate by 50 basis points and lending (repo) rate by 25 basis points to tame inflation.
Following the monetary action, most of the public sector lenders, including Punjab National Bank, Bank of Baroda, Bank of India, Oriental Bank of Commerce and Canara Bank, responded by hiking their BPLRs by up to 50 basis points. At the same time, many banks have increased deposit rates.
Meanwhile, ICICI Bank on Monday raised its benchmark lending rate by 50 basis points to 16.25 per cent, making home, auto and corporate loans costlier.
The revised rate will rate will be effective from August 18, 2010, ICICI Bank said in a statement.
It has also increased by 50 basis points its Floating Reference Rate (FRR) for consumer loans (including home loans).
The revised FRR will be 13.25 per cent as against 12.75 per cent at present. Earlier in the day, public sector State Bank of India hiked its lending rates by 50 basis points and deposit rates by 150 basis points.
BPLR and FRR were used for determining interest rates on loans and advances up to June 30, 2010, ICICI Bank said. With effect from July 1, 2010, interest rate on new loans and advances, including consumer loans. is determined with reference to ICICI Bank Base Rate (I-Base), it said.
The private lender clarified that the fixed rate customers will not be impacted by the above increase and their contracted rates will remain unchanged.
I-Base has been maintained at 7.50% p.a. The Bank will also continue with its current dual rate home loan scheme at existing rates, it added. PTI