Mumbai: Housing Development Finance Corporation Ltd, the country's biggest home loan provider and leading private bank ICICI Bank have announced hikes in their lending and deposit rates.

HDFC would raise its prime lending rate by 50 basis points while ICICI would rise rates on consumer loans by 75 basis points beginning 1 July.

Both banks will also raise deposit rates between 50-100 basis points.

The increases come close on the heels of public sector major State Bank of India announcing a 50 basis point hike in lending rates on consumer loans, including housing and auto loans following a hike in the Reserve Bank's key lending rate and the cash reserve ratio for banks.

The RBI raised its key lending rate by 50 basis points to 8.5 per cent and the CRR to 8.75 per cent from 8.25 per cent, in two stages of 25 basis points each in July 5 and July 19.

At least three other banks, State Bank of Bikaner and Jaipur, Corporation Bank and Union Bank of India, have also raised rates by 50 basis points in recent days.

An increase in the interest rate by half a percentage point on a 20-year home loan increases EMI by about 4 per cent. Home loan rates have soared from 7.5 per cent to 11.5 per cent over the last three years, increasing EMI by almost 35 per cent.

Public sector banks like Punjab National Bank, Union Bank of India and Bank of Baroda are likely to announce the rate increase before 1 July. Depending on the size and capacity of banks, lending rates are expected to go up by 50 to 100 basis points beginning July.
 
The revision in lending rates, which will see a lengthening of EMIs, spells bad news for the housing and auto companies, as well as manufacturers of consumer durables like TV, washing machines and fridges.

The hike in PLR would also raise cost of borrowing for corporates, affecting credit offtake.

SBI, meanwhile, has announced the waiver of  Rs7,000 crore in loans to 25 lakh farmers. SBI has effected a complete loan waiver amounting to Rs6,000 crore for 19 lakh farmers, and a partial loan waiver that amounts to Rs1,000 crore for 6 lakh farmers. In the OBC category, SBI waived loans to the tune of Rs496.37 crore for 1,21,721 farmers.