New Delhi: The country’s largest lender, the State Bank of India (SBI), said it will shortly raise car and other personal loan rates, excluding housing and education, by an average of 0.75%.
“We have announced hike in benchmark prime lending rates by 75 basis points... consequently, we will be raising rates of all (personal) loans, except for housing and education, by 75 basis points on an average,” SBI managing director Yogesh Agarwal told reporters on the sidelines of the launch of electronic system for excise and service taxesWednesday.
He, however, clarified that some loan rates may rise by 1% and some by 0.5%, but the average would be 0.75%.
The interest rate hike would be announced in a few days, Agarwal added.
The SBI chief’s statement came amid reports that ICICI Bank and Kotak Mahindra Bank are increasing interest rates for automobiles by 0.75-1% this weekend.
Pursuant to the increase in the cash reserve ratio by the Reserve Bank of India, SBI had announced a 0.75% increase in its benchmark prime lending rate to 12.25% last month.
However, existing housing and educational loans as well as new educational loans up to Rs4 lakh are excluded from the increase. Similarly, all existing and future agriculture loans of less than Rs3 lakh are excluded from its impact.
SBI, meantime, had also raised interest rates on some of its deposit schemes.
Agarwal said the hardening interest rate cycle has peaked in the economy and the rates are likely to stabilize at these levels. “Usually, interest rates rise towards the end of the year and stabilize at the beginning of the year because of the slack season,” he said.