State Bank of India, the country's largest commercial lender, on Saturday hiked interest rates for corporate lending by half a percent and said that it would take a call on home and other retail loans in the coming week.
The bank's prime lending rate was today increased to 12.75 per cent from 12.25 per cent and will be effective from April 9.
The PLR is the rate at which the bank lends to commercial borrowers.
SBI is the second public sector bank to increase its PLR after Bank of Baroda following Reserve Bank's move last month to squeeze liquidity through the twin measures of increasing cash reserve limits and short-term lending rate (repo).
Another public sector bank, Punjab National Bank, has also said that it would be increasing its PLR soon and other public sector lenders are expected to soon follow suit.
Chennai-based Indian Overseas Bank is expected to increase its PLR by 0.75 per cent while Union Bank of India is believed to be mulling a 0.50-0.75 per cent increase.
Private sector banks had reacted immediately to the RBI's move with Yes Bank upping its PLR by 0.75 per cent on March 30 itself.
Others in the private sector space such as ICICI Bank, HDFC and UTI Bank had also increased their PLRs early this week.