Five banks, including Indian Bank, Andhra Bank and Bank of Maharashtra, have raised lending rates by up to 50 basis points (bps) in line with other lenders.
The hike in interest rates come within a week of the RBI raising its key policy rates by a hefty 50 bps to check high inflation.
With the hike, all loans, including home and auto, will become more expensive.
Indian Bank, Andhra Bank and Dhanlaxmi Bank raised lending rate by 50 bps, while Bank of Maharashtra and Kotak Mahindra Bank increased it by 25 bps.
State-owned Indian Bank and Andhra Bank hiked its base rate or the minimum lending rate and Benchmark Prime Lending Rate (BPLR) by 50 bps to 10.75% and 15%, respectively.
Another public sector lender Bank of Maharashtra raised base rate and BPLR by 25 bps to 10.50% and 14.75%, respectively, the bank said in a statement.
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More than dozen banks have already announced a hike in interest rates following the monetary action by the RBI on July 26 and more are likely to do so in the coming days as cost of funds has gone up.
Last week, the RBI raised the short-term lending (repo) rate by 50 bps to 8% and the short-term borrowing (reverse repo) rate by a same margin to 7% in a bid to tame inflation.
Subsequently, the interest rate under the Marginal Standing Facility, an additional borrowing window, has gone up to 9% from the earlier level of 8.5%.