Union Bank hikes base rate by 0.50%

Public sector Union Bank of India on Monday hiked its base rate by 0.50% to 9%.

Public sector Union Bank of India on Monday hiked its base rate by 0.50% to 9%.

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"The revision is in alignment with the current rate scenario as also the increase in cost of funds," the bank said in a statement sent to the Bombay Stock Exchange.

The move comes within three days of foreign bank standard Chartered also hiking its base rate to 8% while a lot of others like South-based ING Vysya Bank are also mulling similar moves due to an upward bias in rates.

Base rate regime is the new system introduced on July 1 this year to make lending transparent. Under the system banks can revise their base rates once every quarter.

The Base Rate system had replaced the older Benchmark Prime Lending Rate (BPLR) system. Though all the fresh loans are given under the new system, old borrowers are yet to migrate to the new regime due to which banks have to re-aligning their BPLRs.

Union Bank of India had recently hiked its BPLR by 0.50% to 13.25%, the bank said in the statement. Additionally, interest on retail term deposits was also raised by upto one% depending on maturities.