Keeping all apprehensions of prospective and existing home loan customers at rest, State Bank of India on Wednesday announced no change in its lending rates except for linking them to base rate from the benchmark prime lending rate (BPLR) set for its sunset.
“State Bank of India has decided to extend its popular home loan and car loan schemes, and leave their terms unchanged, following the transition to the base rate system w.e.f 1.7.2010. The floating rate component henceforth will, however, be linked to base rate," SBI said in a statement.
Meanwhile, HDFC Bank on Wednesday fixed its base rate at 7.25 per cent, the first major bank to set it rate lower than SBI’s 7.5 per cent. The move is likely to give HDFC Bank more elbow room to lend at lower rates compared to SBI.
A day before the new regime sets in, most banks announced their base rates, which varied between 7 per cent and 8.25 per cent. The exception being Karnataka Bank that set its base rate at 8.5 per cent.
While ICICI bank, the largest private sector bank and Axis Bank did not announce their rates till evening, it were the small private sector banks such as DBS and Dhanlaxmi Bank that came out with most aggressive base rate at 7 per cent.
Bank of Baroda, Oriental Bank of Commerce, Allahabad Bank, Bank of India, Indian Bank and IDBI Bank have set the rate at 8 per cent. Syndicate Bank, Vijay Bank, Dena Bank and Indian Overseas Bank have fixed it at 8.25 per cent.
From Thursday onwards, the base rate system will come into effect, replacing the BPLR that varied between 11 per cent and 13.75 per cent and will serve as a reference rate for banks to set their lending rates.
The RBI introduced the base rate to ensure better transparency in the lending process.