ICICI Bank, 2 others raise lending rates
The country's largest private sector lender ICICI and two other banks today raised their base rate, or minimum lending rate, by up to 75 basis points in line with peers.india Updated: Dec 31, 2010 21:04 IST
The country's largest private sector lender ICICI and two other banks on Friday raised their base rate, or minimum lending rate, by up to 75 basis points in line with peers.
The revision will make corporate and consumer loans, including those for homes and auto, expensive for new borrowers.
Besides ICICI, private sector lenders Kotak Mahindra Bank and Dhanlaxmi Bank also increased base rates.
ICICI Bank has announced an increase of 0.5% in the Base Rate with effect from January 3, 2011. The revised rate will be 8.25% as against 7.75% at present, the bank said in a statement.
It said that with effect from July 1, 2010, interest rates on new loans and advances, including consumer loans, are determined with reference to base rate.
The base rate is the lowest rate below which banks cannot offer loans. In order to bring in more transparency, the base rate was introduced as a replacement for the Benchmark Prime Lending Rate (BPLR) from July 1, 2010.
ICICI Bank has also announced an increase of 0.25% in its benchmark prime-lending rate (BPLR) and in its Floating Reference Rate (FRR) for consumer loans (including home loans) with effect from January 3, 2011.
The BPLR is used for determining interest rates on loans and advances sanctioned up to June 30, 2010.
ICICI said that the fixed rate customers will not be impacted by the above increase and their contracted rates will remain unchanged.
Mumbai-based Kotak Mahindra Bank hiked base rate and BPLR by 0.25% each. With the increase base rate would go up to 8.25%.
"There has been a sharp hike in the deposit rates both on the retail and wholesale side. Base rate is driven by a formula and the hike in deposit rates triggered the increase," said Kotak Mahindra Group President Treasury Mohan Shenoy.
Dhanlaxmi Bank also announced an increase of 0.75% in its base rate and Benchmark Prime Lending Rate (BPLR).
Base rate will be revised to 8.25% from the current 7.50% while BPLR will be changed to 17.25% effective, January 1, 2011.
Many banks, including Union Bank, Punjab National Bank, Bank of India, IDBI Bank, Indian Bank, Indian Overseas Bank, Allahabad Bank, Dena Bank and Standrad Chartered Bank have hiked their base rates in the recent past.