With mounting pressure on its margins, primarily due to the Reserve Bank's tight monetary policy, India's largest lender State Bank of India on Monday hiked its benchmark prime lending rate by 1 per cent to 13.75 per cent with effect from Tuesday.
The hike in BPLR would not affect existing and new housing loans up to Rs 30-lakh, besides, existing auto loans and all types of education loans, a senior SBI official told PTI in Mumbai.
However, new auto loan borrowers would have to pay more following the hike, he said.
"Even after this hike, SBI's BPLR (13.75 per cent) is amongst the lowest in the industry. We expect that this would attract more customers to the bank. The bank is still confident of maintaining a 20-22 per cent growth in advances and around 25 per cent growth in deposits for the remaining part of the fiscal," the official said.
The lender also hiked its deposit rates by 0.25-0.75 per cent on various maturities with effect from Saturday, the official said.
SBI announced its hike after many banks, including its nearest competitor ICICI Bank, which increased their BPLRs to prevent a drastic fall in their profit margins after the apex bank hiked the cash reserve ratio and short-term repo rate by 0.25 per cent and 0.5 per cent respectively its quarterly monetary review last month to check inflation.
Among the major banks which have already hiked their lending rates are Union Bank of India, Bank of India, Central Bank of India, Jammu & Kashmir Bank, IDBI Bank, Axis Bank, IndusInd Bank, Bank of Rajasthan, Yes Bank, Bank of Baroda, Canara Bank, Corporation Bank and Allahabad Bank.