Ghaziabad: Home loans and auto financing from public sector State Bank of India would be dearer as the lender has decided to hike interest rates by 50 basis points on all credit linked to prime lending rates.
Speaking at a function here on 30 June, State Bank chairman and managing director O P Bhatt said the bank has decided to raise the interest rate by 0.5% on all loans such as home loans and auto loans which are linked to PLR.
The revision in PLR came after SBI raised its PLR from 12.25% to 12.75% last week following the Reserve Bank’s increasing its key short-term lending rate to banks and the mandatory cash deposits that banks need to keep with the apex bank (CRR) by 0.5% each.
Referring to the impact on bank’s profit margins, Bhatt he hoped to maintain the net interest margin at 3% this fiscal.
SBI had earlier announced to hike interest rate on fixed deposit rates by up to 75 basis points effective 30 June.
State Bank of India, in which the government has 60% stake, is targeting 40% growth in non-interest income in 2008-09, compared to 28% last fiscal.
The bank had lowered its PLR twice in February to 12.25% but decided to raise by 50 basis points last week.