India's largest bank State Bank of India (SBI) on Thursday increased base rate and benchmark prime lending rate (BPLR) by 25 basis points or bps (100 basis points equals 1%), making home, auto and other loans costlier for the customers. The bank also raised deposit rates by 100 bps in some maturities that will provide better returns to savers. The hike in lending rates and deposit rates will be effective from July 11.
"The bank has revised the base rate upwards by 25 basis points from 9.25% to 9.5% effective from July 11, 2011," said SBI in a press release. The revised BPLR will stand at 14.25% from the current 14%.
To bring in more transparency, base rate (below which banks cannot lend) was introduced by the Reserve Bank that replaced BPLR in July, last year. Loans sanctioned up to June 30, 2010 are linked to BPLR while those sanctioned after are linked to base rate.
In case of deposits, fixed deposits having maturity of 3 year to less than 5 years has seen the highest increase of 100 bps that will offer interest of 9.25%.
SBI's move comes on the back of ICICI Bank raising rates last week. Canara Bank, Indian Overseas Bank, Corporation Bank and Dena Bank also hiked their base rates by 25 basis points each last week in response to the tightening of monetary policy by the RBI last month.
Private lender Dhanlaxmi Bank also raised its base rate and BPLR by 25 basis points each to 10.25 and 19.25%, on Thursday.