State Bank of India, the country's largest lender, on Monday raised its base lending rate by 50 basis points to 12.25 per cent, signalling the trickling down of the reserve Bank's tight money policy.
The new rates will make home, vehicle and corporate loans linked with the rate costlier to existing borrowers. However, for new borrowers the base rate, which became effective from 1 July this year, stands at 7.5 per cent.
The state-run lender also increased its fixed deposit rates by up to 150 basis points across various maturities.
The decision comes days after RBI increased its key rates to control rising prices. "The bank has revised the benchmark prime lending rate upwards by 50 basis points from 11.75 per cent per annum to 12.25 per cent effective 17 August," SBI said a filing with the Bombay Stock Exchange.
SBI along with its associates controls a quarter of bank loans and deposits in India.
It was the first increase by SBI since 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.