ICICI Bank hikes PLR for corporates by 100 bps

ICICI Bank, the country's second largest commercial bank, today increased its corporate prime lending rate by 100 basis points from 11.75 per cent to 12.75 per cent.

The corporate PLR, referred to as ICICI Bank's benchmark advance rate (IBAR), came into effect from today. One basis point is one hundredth of a percentage point.

This is the third round of hike in the prime lending rate of the bank. It had raised its PLR by 50 basis points to 11.75 per cent in early February after a 25 basis point increase in early January.

According to Visakha Mule, the bank's chief financial officer, the successive increase in loan rates is in step with tight liquidity conditions in the market.

The IBAR-linked loan portfolio of the bank worked out to almost 40 per cent of the total corporate portfolio of Rs 30,000 crore, she said.

This hike would only affect corporate loans sanctioned by the bank and not the retail portfolio, she added.

The bank will be redeeming a major part of the high-cost deposits of around Rs 11,400 crore of the erstwhile ICICI in 2006. It has been borrowing in the market at around 9-9.5 per cent for one year, according to market players.

The bank had raised its deposit rates across the board by 50 basis points in early March.

ICICI Bank's average cost of deposits at the end of December was around 4.7 per cent and its yield on advances was at about 8.20 per cent. Its net interest margin was nearly 2.2 per cent.