Private sector HDFC Bank has hiked its benchmark prime lending rate (BPLR) by 0.50 per cent to 16.25 per cent.
The increase comes into effect from today, a bank official told PTI.
"Our cost of funds has been rising in the last two months and we felt that this was the right time to hike our BPLR," the official said.
The bank's move to hike its BPLR is in line with that of the industry with several banks hiking theirs in the recent past.
On liquidity in the system, the HDFC Bank official said presently it was comfortable "but come mid-September with advance tax payments to be made, there could be a tightening of liquidity conditions."
There has been a slowdown in accretion of deposits in the industry and hence, he said, there would be an upward bias on the cost of deposits.
HDFC Bank has already upped its deposit rates twice this year--in February and in July.