A day after Union Bank of India hiked its benchmark prime lending rate, Bank of India (BoI) today followed suit by increasing its BPLR by 0.75 per cent to 14 per cent effective from August 10.
The hike, aimed at protecting its margins, would have an impact on all BPLR-related lending portfolios, a bank official said.
Both Union Bank and IndusInd Bank had hiked their BPLRs by 0.75 per cent to 14 per cent and 17 per cent respectively yesterday.
However, Union Bank has spared its existing home loan borrowers and educational loans from the rate increase.
Other state-owned lenders such as Bank of Baroda and Central Bank of India too may increase their benchmark rates in the near future to prevent a fall in their margins. Banks' profitability has come under pressure in recent months following a series of key rate hikes by the RBI.
The RBI hiked the cash Reserve Ratio and repo rate by 0.25 and 0.5 per cent to 9 per cent in the quarterly review of its annual monetary policy last month.
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Both BoB and Central Bank of India may effect an above 0.5 per cent revision in their BPLRs and may also increase deposit rates in certain maturities.
Other lenders which have hiked their BPLRs following the RBI's policy action include ICICI Bank, Punjab National Bank, HDFC, IDBI Bank, Yes Bank, Axis bank, Jammu & Kashmir Bank and Bank of Rajasthan.