Corporation Bank on Thursday raised its base rate by 50 basis points (bps) to 8.25 per cent, with effect from November 8. Base rate is the minimum rate below which a bank cannot offer loans.
The bank has revised the base rate from 7.75 per cent to 8.25 per cent. This is the first review of the rates since it was introduced in July this year.
According to the Reserve Bank of India (RBI) guidelines, banks have to review their base rates every quarter. With an increase in base rate, all kinds of loans including housing, auto and education loans will become dearer by atleast 50 bps.
In order to bring in more transparency, base rate was introduced as a replacement for the benchmark prime lending rate from July 1 this year.
On Tuesday, RBI raised the key short-term lending and borrowing rates by 25 bps each, with immediate effect. The short-term lending rate, or repo rate, was increased to 6.25 per cent. The borrowing rate, or the reverse repo rate, was raised to 5.25 per cent.
Following RBI action, IDBI Bank increased deposit and lending rates by up to 50 bps.
Yesterday, the State Bank of Mysore also announced a raise of 25 bps in its base rate, taking it to eight per cent.
