Corporation Bank raises base rate by 50 bps

Corporation Bank on Thursday raised its base rate - the minimum rate below which a bank cannot offer loans - by 50 basis points.

The bank has revised the base rate for lending from 7.75 per cent to 8.25 per cent with effect from November 8, Corporation Bank said in a filing to the Bombay Stock Exchange.

This is the first review of rates since it was introduced in July this year. Under Reserve Bank of India (RBI) guidelines, banks have to review their base rates every quarter.

With the increase in base rate, all kinds of loans, including housing, auto and education loans will become dearer by at least 50 basis points.

In order to bring in more transparency, the base rate was introduced as replacement for the benchmark prime lending rate (BPLR) from July 1 this year.

RBI had on Tuesday raised the key short-term lending and borrowing rates by 25 basis points (0.25 per cent), each, with immediate effect, to combat high inflation.

The short-term lending (repo) rate was increased to 6.25 per cent and the borrowing (reverse repo) rate to 5.25 per cent.

Following the action, IDBI Bank had also increased its deposit and lending rates by up to 50 basis points. State Bank of Mysore on Wednesday raised its base rate by 25 basis points to 8 per cent.