State-owned Oriental Bank of Commerce (OBC) and Bank of India (BoI) today their hiked base rate, below which banks can't offer loans, by 50 basis points to 8.5 per cent.
The base rate has been increased to 8.5 per cent with effect from October 1, said a senior OBC official.
With the increase in base rate all kinds of loans, including housing, auto and education become dearer by at least 50 basis points (0.5 per cent).
At the same time, Kolkata-based financing firm Srei Infrastructure Finance also raised benchmark lending rate by 100 basis points to 16 per cent.
Since last week, 11 banks, including ICICI, HDFC, PNB, IDBI Bank and Allahabad Bank have hiked their base rates by up to 50 basis points.
Deposit rates and consequently cost of funds have increased, necessitating an increase in the base rate, the official said.
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As per RBI guideline, banks have to review their base rates every quarter. This is the first review of the rates since it was introduced in July this year.
In order to bring in more transparency, the base rate was introduced as replacement for the Benchmark Prime Lending Rate (BPLR) from July 1 this year.
Yesterday, several banks announced increase in base rate, including Bank of Baroda, HDFC Bank and ICICI Bank.
The revision in base rates follows the RBI's move to raise short-term lending (repo) and borrowing (reverse repo) rates in its September monetary review.