Following the footsteps of bigger rival State Bank of India, the country’s top two private banks, HDFC Bank and ICICI Bank, have decided to increase their lending rates by 45-50 basis points (bps) from Thursday.
India’s second-largest private lender, HDFC Bank, will raise its base rate or minimum loan rate by 45 bps to 8.20 per cent, sources told Business Standard. However, it will keep its benchmark prime lending rate unchanged at 16.50 per cent.
HDFC Bank has raised its base rate thrice by 95 bps since its introduction on July 1. It also raised its benchmark prime lending rate twice by 75 bps during the period.
| RATE CARD | ||
| Bank | Base Rate (in %) | Latest Hike |
| State Bank of India | 8.25 | 25 bps |
| ICICI Bank** | 8.75 | 50 bps |
| HDFC Bank** | 8.20 | 45 bps |
| Punjab National Bank | 9.00 | 50 bps |
| Bank of Baroda | 9.50 | 50 bps |
| *bps stands for basis points **hike effective from February 24 | ||
ICICI Bank, the country’s largest private lender, has also decided to increase its lending rates by 50 bps. It will raise its base rate, benchmark prime lending rate and floating reference rate by 50 bps each, it said in a statement.
With this rise, ICICI Bank’s base rate will stand at 8.75 per cent, benchmark prime lending rate at 17.5 per cent and floating reference rate at 14.5 per cent.
It has raised its base rate thrice by 125 bps since July 2010. It raised its benchmark prime lending rate four times by 175 bps during this period.
Base rate is used as a reference rate to determine interest rates on loans sanctioned since last July. Prime lending rate and floating reference rate were used as benchmarks for deciding rates on loans sanctioned till June 30, 2010.
Earlier this month, India’s biggest lender, State Bank of India, raised its lending rates by 25 bps. SBI’s base rate and benchmark prime lending rate stand at 8.25 per cent and 13 per cent, respectively.
According to analysts, high inflation and intense competition among banks for resources amid tight liquidity conditions are driving up interest rates.
This is the fourth round of rate rises by Indian banks in the second half of this financial year. Banks have also raised deposit rates aggressively since October 2010.
ICICI Bank said it will offer 25-50 bps more on retail term deposits from Thursday. The peak term deposit rate offered by the bank will be 9.25 per cent for 590, 770 and 990-day tenures.
