SBI, ICICI Bank up lending rates by 50 bps

Mumbai, Aug 11 (PTI) India's top two lenders SBI and
ICICI Bank on Thursday announced a hike in lending rates by 50
basis points each, making their home, auto and corporate loans
dearer.
With this hike, borrowers will have to pay higher EMIs
and the tenure of their home and auto loans could also be
extended.
A large number of borrowers will be impacted by the hike
as both the banks together enjoy over 30 per cent market
share.
Both SBI and ICICI have increased the base rate, or the
minimum lending rate, to 10 per cent from the existing 9.50
per cent, they said in separate statements.
SBI said its asset-liability committee, which met here
today, also decided to hike rates on loans under the old
BPLR (benchmark prime lending rate) system by a similar 50
basis points to 14.75 per cent, making loans for existing
borrowers dearer by at least 50 basis points.
ICICI Bank too announced an increase of 50 basis points
in its benchmark prime lending rate and in its floating
reference rate for consumer loans (including home loans).
The revised rates of both lenders would be effective from
August 13.
Following the Reserve Bank's decision to raise short-term
key rates in its first quarter review of monetary policy last
month, lenders have responded by increasing interest rates.
Major lenders including SBI, Punjab National Bank, Bank of
Baroda, Oriental Bank of Commerce have raised interest rates.
In the major bank category, HDFC Bank is the only bank
which have not so far raised rates following July 26 policy
rate hike.
ICICI Bank said, the fixed rate customers will not be
impacted by the rate hike and their contracted rates will
remain unchanged.
Meanwhile, SBI increased its deposit rates in the 180-240
days basket to 7 per cent per annum as against 6.50 per cent
earlier, the statement said.
However, interest rates on other fixed deposits have been
left unchanged.
SBI has raised its lending rate by as much as 2.40 per
cent during the year. The base rate was raised to 8 per cent
from 7.40 per cent in January this year.
The rate hike announcement came within hours of bank
Chairman Pratip Chaudhuri hinting at a hike.
"The RBI has increased the policy rates by 0.5 per
cent...So I think we will have to transmit these rates both
for our depositors as well for our borrowers," Chaudhuri told
reporters earlier in the day.
The RBI had hiked its key short-term lending rates by
a higher-than-expected 50 basis points on July 26 to tame the
uncomfortably high inflation number, which stood at 9.44 per
cent in June.
This was the 11th hike by the central bank since March
2010, when it switched over from the monetary policy loosening
stance adopted during the financial slowdown to one for
curbing inflation.
Following the RBI hike, almost all major banks have hiked
their base rates in the range of 25-100 basis points. Though
music to the ears of policymakers at the Mint Road, borrowers
are a harried lot as loan servicing has become dearer.