SBI joins rate-hike spree; loans, deposit rates go up

The State Bank of India on Thursday hiked its base rate and benchmark prime lending rate (BPLR) by 25 basis points to 9.50 per cent and 14.25 per cent respectively, making home, auto and other loans more expensive, with effect from 11 July.

But bringing some cheer to savers, it has also increased deposit rates by 25-100 bps on various maturities after fine-tuning the period of some maturities. It also eased the penalty on premature closure of deposits.

The hike in BPLR, used to determine floating interest rate loans, to 14.25 per cent from 14 per cent will lead to a rise in the EMIs of existing customers.

A number of banks such as ICICI Bank, Canara Bank, Corporation Bank and ING Vysya Bank have raised their lending rates recently, and now SBI has followed suit.

Besides SBI, two other lenders - Punjab & Sind Bank and Dhanlaxmi Bank - also announced an rease in lending rates by 25 bps each, with immediate effect. After the increase, the base rate of Punjab & Sind and Dhanlaxmi Bank now stands at 10.25 per cent. While the BPLR of Punjab & Sind now stands at 14.75 per cent, it is 19.25 per cent for private sector lender Dhanlaxmi bank.

The SBI's interest rate on fixed deposits with a maturity period of 1-2 years has gone up from 8.25 per cent to 9.25 per cent. The decision follows the rate hike announced by the Reserve Bank in its policy review last month.