Mumbai: The country’s top two lenders State Bank of India (SBI) and ICICI Bank Ltd on Thursday raised their base rates, or their minimum lending rates, by 50 basis points (bps) each to 10%, making loans dearer for borrowers.
One basis point is one-hundredth of a percentage point.
Both lenders also increased their benchmark prime lending rates (BPLR) by identical margins. SBI’s BPLR now stands at 14.75% and ICICI Bank’s at 18.75%, the banks said in separate statements. The hikes are effective 13 August.
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SBI also raised its interest rate for deposits of 180-240 days maturity to 7% from 6.5%.
Base rate was introduced in July 2010 replacing BPLR, but loans given to some existing customers are still linked to BPLR.
ICICI Bank also hiked its floating reference rate, or FRR, for consumer loans including home loans to 15.75% effective Saturday.
The asset liability committees of both lenders, which decide their interest rates, met on Thursday to increase lending rates to offset the impact of the high cost of funds following successive rate hikes by the Reserve Bank of India (RBI).
The central bank has raised its key policy rate 11 times since March 2010, from 3.25% to 8%, to fight inflation.
Since July 2010, many Indian banks have hiked their loan rates at least by 225 bps.
Before this, SBI raised its lending rates on 11 July, increasing its base rate and BPLR by 25 bps to 9.5% and 14.25%, respectively. SBI had also raised its deposit rate by 1 percentage point across maturities.
Similarly, ICICI Bank raised its base rate by 25 bps in July to 9.5% and its BPLR to 18.25%.