Indian banks decide to pass on rate hike to customers
02 Jul 2011
Indian banks, including the country's largest private lender ICICI Bank and state-run Dena Bank, have increased benchmark base rates, following an interest rate hike by Reserve Bank of India in June.
On 16 June RBI, the country's central bank, had raised interest rates (both repo and reverse repo) by 25 basis points, the 10th hike since March 2010, to combat stubbornly high inflation. Most banks responding by hinting at at rate hikes, as they could not absorb the successive rate hikes.
ICICI Bank, which is the country's second-largest lender after State Bank of India (SBI), has hiked lending rates by 25 basis points to 9.50 per cent. The hike will be effective from Monday, it said in statement.
The hike in base rates will make the bank's new housing, auto and other loans costlier.
The bank also hiked benchmark prime lending rate (BPLR) and floating reference rate (FRR) for consumer loans (including home loans) by 0.25 per cent (25 basis points), effective Monday.
The BPLR would be used to determine interest rates on loans and advances sanctioned up to 30 June 2010, it said.