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State-owned Indian Overseas Bank(IOB) today raised its base rate by 50 basis points to 10 per cent, within days of the Reserve Bank announcing an increase in its short-term lending and bank savings rates. The revised rates will be effective from May 6, the bank said in a filing to the Bombay Stock Exchange (BSE).
Base rate is the benchmark below which the bank can not lend funds to its customers.
IOB has also increased its Benchmark Prime Lending Rate (BPLR) from 13.75 per cent to 14.25 per cent with effect from today. The Base Rate system replaced the BPLR system with effect from July 1, 2010. However, BPLR is applicable to old customers who took loans earlier.
The higher lending rates would make loans dearer for both new and existing auto, home and corporate borrowers.
The RBI hiked the short-term lending (repo) rate and borrowing (reverse repo) by 50 basis points in its Annual Credit Policy Review on May 3.
The repo rate and reverse repo rate now stand at 7.25 per cent and 6.25 per cent, respectively besides raising the savings bank deposit interest rate by 50 bps to 4 per cent.
Shares of Indian Overseas Bank closed higher by 3.01 per cent at Rs 155.7 on BSE.
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