The country’s second largest private lender HDFC Bank and public sector players Bank of Baroda (BoB) and United Bank of India raised their prime lending rates by 50 to 75 basis points.
HDFC Bank raised its PLR by 50 basis points to 16.50 per cent 10 days after the Reserve Bank of India announced further monetary tightening in an attempt to fight inflation. The central bank had decided to raise the repo rate and the cash reserve ratio to 9 per cent each.
The private player raised the interest rate payable on deposits with maturities of over one year by up to 50 basis points. A deposit of over one year will earn at least 9 per cent per year, according to information posted on the HDFC Bank website.
The two public sector banks, however, did not hike deposit rates and also decided to keep home loans up to Rs 30 lakh – both new and existing -- outside the ambit of the latest revision.
Now, almost all banks – barring the country’s largest lender State Bank of India – have taken a cue from RBI’s monetary tightening and raised lending rates. While sources said SBI is expected to announce a 50 basis point increase, a formal word is awaited.
“This revision in lending rates has been done to partially overcome the adverse cost and profitability implications arising from monetary policy tightening measures announced by RBI,” BoB said.
While an HDFC Bank spokesperson did not share details, BoB said the cost of new home, auto and other consumer loans will go up 50 basis points.