Private sector lender Dhanlaxmi Bank today raised base rate, or the minimum lending rate, by 50 basis points (bps) to 8.75% in line with other lenders.
The base rate will be revised to 8.75% from the current 8.25% effective tomorrow, Dhanlaxmi Bank said in a statement.
Base rate is the lending rate below which no loans can be offered. This will make new loans, including housing and auto expensive by at least 50 bps.
The change in base rate will be applicable to all new loans and existing floating rate loans linked to base rate, it said.
In the case of existing fixed rate loans, the change in base rate will be applicable at the reset date. The existing borrowers have the option to switch to the base rate system before the expiry of existing contracts, on mutually agreed terms, it said.
However, the bank has kept its Benchmark Prime Lending Rate (BPLR) unchanged at 17.25%.
This hike in base rate reflects tight monetary conditions and is in line with market trends, it said.
Banks have been raising interest rates following a 0.25 percentage point hike in short-term lending (repo) and borrowing (reverse repo) rates announced by the Reserve Bank in its third quarterly monetary policy review on January 25 this year.
