BoB hikes lending rates by 50 bps

State run Bank of Baroda (BoB) today announced the increase of its benchmark prime lending rate (BPLR) by 50 basis points with effect from tomorrow.

“The bank has decided to increase its benchmark prime lending rate (BPLR) by 50 basis points from 13.25 per cent to 13.75 per cent”, BoB said in a filing to the Bombay Stock Exchange.

BoB’s decision to hike lending rates follows similar moves by other state lenders Indian Bank, Indian Overseas Bank, Bank of India and Dena Bank early this week.

Private sector lender HDFC Ltd has also increased lending rates by 25 basis points.

Further, it has also hiked the base rate, the minimum rate below which banks cannot lend, from nine per cent to 9.5 per cent with effect from February 4.

Yesterday, BoB had also raised deposit rates by 50 basis points (BPS) to 9.10 per cent for 444 days deposits till March 2011 and for deposit of one year and up to 443 days to 8.75 per cent.

Meanwhile, Bank of India also announced a hike in its deposit rates by 25 basis points to 8.75 per cent for term deposits (with tenure of one year or more but less than two years) for less than Rs 1 crore from tomorrow.

It has also increased interest rates for term deposits for 555 days to 9.25 per cent from nine per cent.

While the higher deposit rates would provide better returns to savers, rise in base rates would increase the EMIs for auto and home loan borrowers.

Besides, corporate loans too would become expensive.

Banks have been raising interest rates following a 25 basis point hike in short term lending (repo) and borrowing (reverse repo) rates announced by the Reserve Bank in its third quarterly review of monetary policy last week.

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