Within a week of the Reserve Bank of India (RBI) hiking key policy rates, several lenders, including Punjab National Bank (PNB), today announced an increase in their deposit ad lending rates by up to 100 basis points.
State-run PNB, Allahabad Bank and Punjab & Sind Bank (PSB) raised lending rates by up to 50 basis points.
While PNB raised its benchmark prime lending rate (BPLR) by 50 basis points to 13 per cent, Allahabad Bank increased it by 25 basis points to 13.50 per cent.
PSB raised its BPLR by 25 basis points to 14.25 per cent. All the three also raised their base rates by 50 basis points each to 9.50 per cent.
The new rates will be effective from tomorrow. While higher lending rates would make loans dearer for auto, home and corporate borrowers, the hike in fixed deposit (FD) rates will benefit savers.
The depositors can now expect to get annual interest of 9.25 per cent on FDs of 1,111 days, while depositors in PSB will get the same rate for 1,000-day FDs.
PSB has also announced that it will give an interest of 8.25 per cent and 9 per cent on deposits with maturity of 222 days and 500 days, respectively.
Allahabad Bank said it has launched a 400-day deposit scheme which will attract an annual interest of 8.5 per cent.
The decision to raise deposit and lending rates follows the Reserve Bank's monetary policy last week during which the central bank raised its short-term lending (repo) and borrowing (reverse repo rate) by 25 basis points to 6.5 per cent and 5.5 per cent, respectively.
PNB said that it raised the rates, "in response to changing liquidity conditions in the system, inflation, other macroeconomic factors and monetary measures undertaken by the Reserve Bank".
The increase in deposit rates from 25 basis points to 100 basis points for FDs of various maturity periods, PNB said, will "compensate the savers for the negative real rates in view of high inflation and in line with the concern shown by the Governor, RBI in the third quarterly review of credit policy".
Following the RBI policy, leading private sector lender HDFC Bank last week had said the it would increase the lending rates but would restrain from hiking the deposit rates.
