The State Bank of India (SBI) on Thursday hiked the base rate by 10 basis points, which is likely to make loans of existing borrowers a little expensive, a report in Livemint said. It quoted a communication on the SBI website, which said that the new rate came into effect from December 15, 2021.
In September, the largest public sector bank had lowered the base rate by 5 basis points - to 7.45 per cent.
SBI’s move comes days after the Reserve Bank of India (RBI) kept its repo rate and reverse repo rate unchanged in its bi-monthly policy review meeting.
RBI Governor Shaktikanta Das said that India is better prepared to fight the coronavirus disease (Covid-19) pandemic, but added that there is a need for policy support because of the emergence of new Covid variant Omicron.
There was a 5:1 majority to retain RBI's accommodative stance in the policy review meeting.
In the last policy review in October, the RBI had kept the key lending rates unchanged for eight consecutive times. The repo rate, at which the central bank lends short-term funds to banks, was kept unchanged at 4 per cent. The reverse repo rate, at which the RBI borrows from banks, was kept unchanged at 3.35 per cent. The Marginal Standing Facility (MSF) rate was also kept unchanged at 4.25 per cent.
The last time the RBI changed the policy rate was in May 2020. The central bank had slashed the key policy rates in May 2020 to historic lows to support the economy hit by the Covid-19 pandemic. Since then the RBI has maintained the status quo.
{{/usCountry}}The last time the RBI changed the policy rate was in May 2020. The central bank had slashed the key policy rates in May 2020 to historic lows to support the economy hit by the Covid-19 pandemic. Since then the RBI has maintained the status quo.
{{/usCountry}}However, during this period the Indian economy has been on a roller coaster. During April-June 2020 quarter, a period when the RBI last changed policy rates, India's GDP slumped by 24.4 per cent. The economy posted a growth of 20.1 per cent during April-June 2021 quarter. The GDP posted a growth of 8.4 per cent in July-September 2021 quarter as against a contraction of 7.4 per cent in the year-ago period.