State-run Bank of Baroda (BoB) and Canara Bank on Thursday announced an increase in their benchmark prime lending rate (BPLR) by 0.5 per cent with effect from Friday. Both the public sector banks have decided to increase their BPLR to 13.75 per cent from 13.25 per cent.
The hike in base rates will have a direct impact on the equated monthly installments (EMIs) for auto and home loan borrowers. Corporate loans will also become costlier.
The decision by these banks to hike lending rates follow similar moves by other public sector banks, such as Indian Bank, Indian Overseas Bank, Bank of India and Dena Bank, earlier this week.
Private sector lender HDFC Ltd has also increased lending rates by 0.25 per cent. The bank has hiked the base rate (the minimum rate below which banks cannot lend) to 9.5 per cent from nine per cent, with effect from February 4.
Canara Bank has also announced an increase in the rate of interest on domestic term deposits in the range of 0.25 per cent to 1.5 per cent across maturities. BoB has taken similar steps and the bank has raised deposit rates by 0.5 per cent to 9.10 per cent for 444 days deposits till March 2011 and for deposits of one year and up to 443 days to 8.75 per cent.
Meanwhile, Bank of India also announced a hike in its deposit rates by 0.25 per cent to 8.75 per cent for term deposits (with tenure of one year or more but less than two years) for less than Rs 1 crore. It has also increased interest rates for term deposits for 555 days to 9.25 per cent from nine per cent.
Most banks have taken to raising interest rates following a 0.25 per cent hike in short-term lending (repo) and borrowing (reverse repo) rates announced by the Reserve Bank of India (RBI) in its third quarterly review of monetary policy last week as part of its tight money policy to control inflation.
Courtesy: Mail Today