Three of India's leading state-run banks - Bank of Boroda (BoB), Bank of India (BoI) and the Punjab National Bank (PNB) on Thursday hiked their interest rates across the board.
PNB, BoB and BoI have all raised their benchmark prime lending rates (PLR) by 50 basis points each. The rates will be effective from Friday, the banks said in Mumbai.
While PNB had increased its PLR last month by 25 basis points its PLR now will stand at 12.25 per cent and BoI, which had raised its PLR by 50 basis points, will have a PLR of 12.50 per cent after the hike. BOB's PLR has increased to 12.5 per cent.
The move follows India's central bank, the Reserve Bank of India, tightening the monetary policy for a second time in two weeks on Tuesday.
The Reserve Bank of India (RBI) had hiked the cash reserve ratio (CRR) by 50 basis points effective in two equal phases from February 17 and March 3 respectively.
Meanwhile, analysts said the current measures should bring down the inflation rate.
"Taken together with recent import duty cuts, monetary tightening and more duty cuts in the budget, inflation should begin to come off in the next month or so," an analyst said.