State Bank of Mysore raises base rate to 8%

A day after the Reserve Bank of India (RBI) raised short-term key policy rates, State Bank of Mysore announced increasing its base rate - the minimum rate below which a bank cannot offer loans.

The bank has revised base rate upwards by 25 basis points, from 7.75 per cent to 8 per cent, with effect from November 1, State Bank of Mysore informed the Bombay Stock Exchange.

This is the first review of the rates since it was introduced in July this year. Under the 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 25 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 increased 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 also increased its deposit and lending rates by up to 50 basis points.