New Delhi: Days after RBI hiked policy rate, country's largest lender State Bank of India (SBI) on Wednesday raised its lending rate by 0.20 percent to 10 percent, a move that is likely to be followed by other banks.
The bank has revised the base rate or the minimum lending rate to 10 percent from 9.80 percent effective Thursday, SBI said in a statement.
With the revision in base rate, EMI for home, auto and consumer durable loans will go up. However, the bank is offering new loans at concessional rates for a limited period ending January 31, 2014.
At the same time, the Benchmark Prime Lending Rate (BPLR) was also raised by 0.20 percent from 14.55 percent to 14.75 percent.
Private sector lender, Axis Bank has also revised the interest rates on select maturities for fixed deposits amount less than Rs 1 crore. In two buckets there has been upward revision of 0.25 percent while there is downward revision of 0.25 percent in 9 buckets.
Term deposit between 13 to less than 15 months now attracts 8.75 percent, up by 0.25 percent.
At the same time, there has been 0.25 percent decrease in various buckets between 61 days to less than six months to 8.25 percent.
Similarly, various buckets between 6 months to less than 11 months the decrease is by similar percentage points to 8.5 percent.
In case of term deposit between 46-60 days, rates have been revised downward by 0.5 percent from 8.5 percent earlier.
The new rates are effective from November 1, according to Axis Bank website.
SBI's decision came a day after HDFC Bank raised the base rate by 0.20 percent to 10 percent.
Commenting on the base rate increase, SBI Chairperson Arundhati Bhattacharya said it is on account of the rise in cost of funds.
Repo rate has gone up by 0.50 percent since SBI had last raised it, she said, adding, the bank has not raised rates to that extent but by only 0.20 percent.
It is in line with the market and the bank base rate still remains one of the lowest, she added.
Earlier this month, SBI raised fixed deposit rate by 0.2 percent on select maturity.
With the revision, term deposit between 180-210 days less than Rs 1 crore now earn 7 percent against 6.80 percent earlier.
Soon after RBI policy announcement on October 29, Bhattacharya had said: "This is something which the ALCO (asset liability committee) will come to a view on. But yes, some rate change is expected...Which way and what, you need to wait till the ALCO meets and takes a view on it."
RBI raised short-term lending (repo) rate by 0.25 percent to 7.75 percent, making cost of fund expensive for the banks.
At the same time, the RBI lowered marginal standing facility (MSF) rate by a similar margin to 8.75 percent.
Accordingly, the bank rate was reduced to 8.75 percent with immediate effect. Consequently, the reverse repo rate is adjusted upward to 6.75 percent.
The RBI has left unchanged other rates such as the cash reserve ratio at 4 percent and the mandatory holdings in government securities and other liquid assets as a solvency measure - Statutory Liquidity Ratio (SLR) - at 23 percent.
SBI had last raised base rate by 0.10 percent to 9.80 percent in September this year.