CHENNAI: A day after the Reserve Bank of India raised its policy rates, banks on Wednesday were quick to take the cue and responded by increasing their lending rates. Punjab National Bank (PNB), Oriental Bank of Commerce (OBC) and Yes Bank have raised their base rate and the BPLR (bench mark prime lending rates by 50 basis points or 0.50%, thereby making loans costlier both for their new as well as the existing borrowers.
IDBI Bank was the first to raise its interest rates. The bank increased both its lending and deposit rates by 0.5% on Tuesday soon after RBI's announced rate increases. PNB's new base rate and BPLR are 10% and 13.5% and are effective Thursday. OBC has revised its base rate to 10% and the BPLR from 13.75% to 14.25%.In an unexpected move the RBI in its monetary policy announced on Tuesday increased its key policy rates by 0.50%. The repo rate -- the rate at which the central bank lends to the banks -- now is 7.25% while the reverse repo rate -- the rate at which it borrows from the other banks is 6.25%. The latest hike, ninth in the past year, is aimed at cooling headline inflation.
"Rate hike is inevitable now. We will decide about increasing our interest rates in the next two days," S C Bansal, executive director, United Bank of India, said.
Bank of Baroda, too, hinted at a rate hike. "We will take a call in a day or two. We may not hike our deposit rates, as we have already raised it 2.50% (over the past few months) while our lending rates have gone up by 1.5%," R K Bakshi, ED, Bank of Baroda said.
According to T M Bhasin, CMD of Indian Bank, the bank's senior brass is meeting on Thursday to consider rate increases. There is a possibility of a 0.50% increase in its base rate as well as BPLR. However, the bank is not keen to raise it deposit rates. "Deposit rates are already high. We are not going to raise our deposit rates for the time being," he said.
However, some banks like OBC may raise deposit rates. "We will take a call on deposit rates in couple of days. We may increase our deposit rates by 0.25% to 0.5% on deposits schemes with less than 1-year maturity," said S C Sinha, ED, OBC .
IDBI Bank was the first to raise its interest rates. The bank increased both its lending and deposit rates by 0.5% on Tuesday soon after RBI's announced rate increases. PNB's new base rate and BPLR are 10% and 13.5% and are effective Thursday. OBC has revised its base rate to 10% and the BPLR from 13.75% to 14.25%.In an unexpected move the RBI in its monetary policy announced on Tuesday increased its key policy rates by 0.50%. The repo rate -- the rate at which the central bank lends to the banks -- now is 7.25% while the reverse repo rate -- the rate at which it borrows from the other banks is 6.25%. The latest hike, ninth in the past year, is aimed at cooling headline inflation.
"Rate hike is inevitable now. We will decide about increasing our interest rates in the next two days," S C Bansal, executive director, United Bank of India, said.
Bank of Baroda, too, hinted at a rate hike. "We will take a call in a day or two. We may not hike our deposit rates, as we have already raised it 2.50% (over the past few months) while our lending rates have gone up by 1.5%," R K Bakshi, ED, Bank of Baroda said.
According to T M Bhasin, CMD of Indian Bank, the bank's senior brass is meeting on Thursday to consider rate increases. There is a possibility of a 0.50% increase in its base rate as well as BPLR. However, the bank is not keen to raise it deposit rates. "Deposit rates are already high. We are not going to raise our deposit rates for the time being," he said.
However, some banks like OBC may raise deposit rates. "We will take a call on deposit rates in couple of days. We may increase our deposit rates by 0.25% to 0.5% on deposits schemes with less than 1-year maturity," said S C Sinha, ED, OBC .
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