BackState Bank of India ups lending, deposit rates
State Bank of India ups lending, deposit rates
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Mumbai: State Bank of India (SBI), the country’s largest lender, said on Monday it was raising lending and deposit rates, signalling a tightening policy by the Reserve Bank of India (RBI) was trickling down.
It was the first increase by State Bank since the RBI began clamping down monetary policy in February by raising the level of deposits that commercial banks must keep with the central bank.
The RBI has raised its main short-term lending rate by 100 basis points since mid-March and the borrowing rate by 125 points, to rein in inflation that has stubbornly stayed in double-digits for five months.
State Bank, which along with its associates control a quarter of bank loans and deposits in India, said it was raising its benchmark prime lending rate (BPLR) by 50 basis points to 12.25% effective Tuesday.
Simultaneously, it hiked the interest rates by 25 basis points to 150 basis points on different maturities of deposits below Rs1 crore ($0.2 million), the bank said in a statement to the Bombay Stock Exchange.
It also launched a floating rate term deposit product linked to its base rate effective 6 September. While the BPLR has been raised, the bank can effectively give loans below the rate depending on its perception of risk of the customer. In July, it had fixed its base rate or the new reference lending rate at 7.5%.
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