Major indian banks hike PLR

Mumbai, Apr 29 (UNI) State Bank of India today joined with other banks like Oriential Bank of Commerce and Punjab National Bank in raising interest rates by 0.25- 0.50 per cent from May 1, in the face of RBI hiking risk provisioning for loans above Rs 20 lakh in its credit policy.

While Punjab National Bank hiked its prime lending rates (PLR), Oriental Bank of Commerce raised home loan rates by 0.25 to 1 per cent from May 1.

SBI's fixed home loans up to 5 years would be 9.50 per cent (against 9.25 per cent), for 5-10 years 9.75 per cent (9.50 per cent). Floating loan rates would be up by 0.50 per cent.

The rate hike comes a day after another public sector bank,- Bank of Baroda hiked PLR by half a percentage. Already, home loan leader HDFC had hiked its rates by 0.50 per cent in February after the quarterly review of monetary policy increased repo and reverse repo rates to contain inflation.

Though many of the public sector banks are feeling the liquidity crunch, they had refrained from hiking home loan rates adopting a wait and watch approach.

The home loan rates had reached a rock bottom of 7 per cent by 2003 after various banks resorted to rate war to woo customers creating a boom in the housing sector. However, to improve the quality of loans, RBI has now increased the risk weight provisioning from 0.4 per cent to one per cent for home loans beyond Rs 20 lakh.

PNB, the country's second largest public sector lender, said it increased PLR by 0.50 per cent to 11.25 per cent. SBI, PNB and BOB have also hiked interest rates paid to depositors by 0.25-0.50 per cent.

UNI GC PP SKB2002