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A slew of public sector banks (PSBs) have hiked their base rates by 25-50 basis points, making auto, housing and other loans more expensive for borrowers.
RBI move
The hike in base rate – which is the minimum lending rate – has been necessitated by the increase in cost of funds and also the need to be in harmony with the Reserve Bank of India's recent move to up its policy rates by 25 basis points, say bankers.
Union Bank of India (UBI), Punjab & Sind Bank, Andhra Bank and State Bank of Mysore have all now raised their base rates by 25 basis points. State Bank of Bikaner & Jaipur has raised the base rate by 50 basis points to 9.75 per cent.
The base rate hike of these banks comes close on the heels of State Bank of India (SBI) and ICICI Bank effecting a 25 basis point increase last week.
In the case of Union Bank, its asset liability committee (ALCO) met on Saturday and decided to hike base rate to 10.25 per cent with effect from Monday (July 11), from the current level of 10 per cent.
no change in bplr
There is, however, no change to the benchmark prime lending rate (BPLR) currently pegged at 14.25 percent, a UBI official said. Punjab & Sind Bank, another public sector lender, has also hiked its base rate to 10.25 per cent from 10 per cent per annum. The BPLR of the bank has gone up from 14.50 per cent to 14.75 per cent.
For Andhra Bank, the base rate has gone up from 10 per cent to 10.25 per cent effective Monday. The BPLR has also been hiked by 25 basis points to 14.50 per cent. State Bank of Mysore has hiked its base rate to 9.75 per cent from current level of 9.5 per cent.
As part of its mid-quarterly review of credit policy, the RBI had last month hiked its key short-term lending and borrowing rates by 25 basis points each to rein in inflation.
While the central bank's repo rate (short term lending rate) is now pegged at 7.5 per cent, the borrowing rate (reverse repo) stood at 6.5 per cent. The RBI is slated to take up the next review on July 26.
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