Union Bank revises base rate, deposit rate

State-owned Union Bank of India on Friday announced an increase in base rate or minimum lending rate by 50 basis points (bps) to 8.5 per cent.

At the same time, it also raised fixed deposit rates by 25 basis points across various maturities with effect from October 18, the bank said in a statement.

In view of the current macroeconomic scenario, hardening interest rates and Reserve Bank of India's policy stance, the bank has decided to revise its base rate and also interest on retail term deposit, it said.

With the increase in base rate all kinds of loans, including housing, auto and education loans become dearer by at least 50 basis points (0.5 per cent).

According to RBI guidelines, banks have to review their base rates every quarter. This is the first review of the rates since it was introduced in July this year.

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.

The bank raised term deposit rates by 25 basis points for one year to less than 3 years from 7 per cent to 7.25 per cent, the bank said. Fixed deposits in between three years and above would attract a rate of 7.5 per cent, against the existing 7.25 per cent.

The bank is offering 8 per cent rate for retail deposits of maturity of 10 years, it said, adding, this interest is also linked to special product Union Million Deposit under which investment will mature to Rs 1 million at the end of 10 years, either through a lump sum investment or through a monthly investment.