New Delhi, Feb 11 (PTI) Borrowers of SBI will have topay higher interest rates at least by 0.25 per cent but newdepositors of 555 and 1,000-day term deposits with thecountry''s largest bank would earn that much more.
State Bank of India''s (SBI) decision to raise ratesfollows a similar move by over a dozen other banks.
SBI revised the base rate or the minimum lending rateby 25 basis points to 8.25 per cent, the bank said in astatement.The benchmark prime lending rate (BPLR) for theexisting customers has been increased by 25 basis points to 13per cent.
The hike in BPLR would make existing loans costlierwhile base rate increase will make new loans expensive.
While the higher deposit rates would provide betterreturns to savers, rise in lending rate would increase theEMIs for auto and home loan borrowers. Besides, corporateloans too would become expensive.
With the increase in base rate, most of the loansexcept new home loans, would be dearer by at least 25 basispoints (0.25 per cent).
However, there was no clarity with regard to housingbecause the bank runs teasers scheme under which the interestrates are lower in the initial years of the credit period.
In order to bring in more transparency, the base ratewas introduced as replacement for the Benchmark Prime LendingRate (BPLR) from July 1, 2010.
In the base rate regime, banks cannot offer loansbelow their announced rate. However, in the BPLR regime, theloans were sanctioned below the benchmark depending on thecreditworthiness of the customer.
Besides, the bank has also increased fixed depositrates on two select maturities by 25 basis points.
Both 555 days and 1,000 days fixed deposits wouldattract 9.25 per cent from existing 9 per cent. The new rateswould be effective from February 14.
SBI last revised both its lending and deposit rates onJanuary 1 this year. Base rate was increased by 40 basispoints while deposit rates were hiked up to 100 basis pointsacross various maturities.
Banks have been raising interest rates following a0.25 percentage point hike in short-term lending (repo) andborrowing (reverse repo) rates announced by the Reserve Bankin its third quarterly review of monetary policy last month.
More than a dozen banks including Punjab NationalBank, Bank of Baroda, Union Bank of India and Indian OverseasBank, have already revised interest rates since the thirdquarterly review of the monetary policy on January 25 by theReserve Bank of India.