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State-run Bank of Baroda has increased its base rate, the minimum lending rate, by 50 basis points to 9.5 per cent. It has also hiked the benchmark prime lending rate (BPLR) by 50 basis points to 13.75 per cent.
BoB said the base rate and BPLR (the best rate offered to customers) are being increased in response to RBI’s another money tightening signal in its January 25 quarterly monetary policy review.
The banking regulator had increased both the short-term lending (repo) and borrowing (reverse repo) rates by 25 basis points each to tame inflation.
BoB’s decision to hike rates follows similar moves by other lenders like Indian Bank, Indian Overseas Bank, Bank of India, Dena Bank and HDFC earlier this week.
While the higher deposit rates would provide better returns to savers, rise in base rates would increase the EMIs of auto and home loan borrowers. Besides, corporate loans too would become expensive.
The base rate system has replaced the BPLR system with effect from July 1, 2010. However, the BPLR regime continues for the old borrowers.
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