State-owned Indian Overseas Bank (IOB) on Saturday announced increase in its lending rate by 50 basis points in line with the industry trend. The Benchmark Prime Lending Rate (BPLR) of the bank will be 12.5 per cent effective from August 23, IOB informed the Bombay Stock Exchange.
The increase in interest would not lead to rise in housing loan, it said. However, auto and corporate loans linked to BPLR would become expensive for the existing borrowers. The decision comes days after the State Bank of India and ICICI Bank raised its BPLR by 50 basis points. Last month, the RBI, in its monetary review, raised the short-term borrowing (reverse repo) rate by 50 basis points and lending (repo) rate by 25 basis points to tame inflation.
It was part of a series of rate hikes since February this year. Following the monetary action, most of the public sector lenders, including Punjab National Bank, Bank of Baroda, Bank of India, Oriental Bank of Commerce and Canara Bank, responded by hiking their BPLRs by up to 50 basis points. At the same time, many banks have increased deposit rates.