Four more public sector banks on Monday joined market leader State Bank of India and others to hike lending and deposit rates following another bout of monetary tightening by the country's central bank.
Allahabad Bank said it has decided to increase its benchmark prime lending rate by 0.5 per cent to 13.50 per cent, effective Tuesday.
The bank also raised its term deposit rates by 50 basis points for various maturities, in a bid to maintain its net interest margin. The maximum interest rate on term deposit will be 9.5 per cent for a period of one to three years, the bank said in a statement. "For senior citizens, the rate of interest for the same period would be 10 per cent," it added.
Bank of India and Dena Bank also announced a similar hike in their prime lending rates.
Bangalore-based Vijaya Bank announced a 0.25 per cent point hike in its prime lending rate to 13.25 per cent and up to 0.50 per cent increase in deposit rates with effect from Tuesday.
Last week, leading public sector banks such as the State Bank of India and Bank of Baroda increased interest rates after the Reserve Bank of India raised one of key lending rates and ordered commercial banks to hold more in reserves. The measures from the central bank were aimed at leaving less money in the system so that inflation, which has already reached a double-digit level, can be curtailed.
Among major state-run banks, New Delhi-based Oriental Bank of Commerce has yet to take a decision.
"The bank's asset-liability committee will meet in a week's time to review lending and deposit rates," said A.K. Misra, chairman and managing director of the bank.
Any rate revision will lead to increase in PLR- related lendings such as floating home loans, corporate loans, car loans etc.