Mumbai: State owned Union Bank of India on Monday raised base rate (or the minimum lending rate) by 50 basis points to 9% in line with other lenders.
The revision is in alignment with the current rate scenario as also the increase in the cost of funds, Union Bank of India informed the Bombay Stock Exchange (BSE).
The base rate is the lowest rate below which banks cannot offer loans. In order to bring in more transparency, the base rate was introduced as a replacement for the Benchmark Prime Lending Rate (BPLR) from 1 July, 2010.
With the increase in base rate, all kinds of loans taken from Union Bank of India, including corporate, housing and auto loans, would be dearer by at least 50 basis points (0.5%) for new borrowers.
Earlier this month, the bank hiked its retail term deposit interest rates across various maturities between 75 and 100 basis points.
The Benchmark Prime Lending Rate (BPLR) was also hiked by 50 basis points to 13.25% leading to increase in EMIs for the existing customers.
During the month many banks including Punjab National Bank, Bank of India, IDBI Bank, Indian Bank, Indian Overseas Bank, Allahabad Bank and Dena Bank raised their base rate.