New Delhi: Several banks including Indian Overseas Bank (IOB), Punjab & Sind Bank and Corporation Bank have raised lending rate by up to 50 basis points in line with other lenders.
While all loans, including home and auto, will become expensive, depositors will get better returns on their savings.
The hike in interest rates come within a week of the RBI raising its key policy rates by a hefty 50 basis points to check high inflation.
IOB, Syndicate Bank and Punjab & Sind Bank raised lending rate by 50 basis points, while another public sector lender Corporation Bank increased it by 40 basis points.
Syndicate Bank has also revised term deposit rates up to 50 basis points on select maturities.
The interest rate on fixed deposit between 270-364 days of will now earn 9.75% from existing level of 9.25%, an increase of 50 basis points.
The term deposit maturity in between 91-120 days has been revised upward by 35 basis points to 7.60%, Syndicate Bank said in a statement.
The revised rate will apply to all loans from 1 August 2011.
More than dozen banks have already announced a hike in interest rates following the monetary action by the RBI on 26 July and many more are likely to do so in the coming days as cost of funds has gone up.
Earlier this week, the RBI raised the short-term lending (repo) rate by 50 basis points to 8% and the short-term borrowing (reverse repo) rate by a same margin to 7% in a bid to tame inflation.
Subsequently, the interest rate under the Marginal Standing Facility, an additional borrowing window, has gone up to 9% from the earlier level of 8.5%.