Three major lenders, including country's biggest private sector bank ICICI Bank, on Friday announced an
increase of 25 basis points, or 0.25 per cent, in lending rates, making
auto, home and corporate loans more expensive for borrowers.
The rate hike will increase the cost for those who had taken advances on floating rate of interest.
Besides ICICI Bank, state-owned Indian Overseas Bank (IOB) and Dena Bank have also announced increase in their lending rates by similar margin.
The decision to hike lending comes within weeks of the Reserve Bank of India (RBI) increasing in key lending (repo) and borrowing (reverse repo) rates by 25 basis points to tame rising inflation.
MUST READ: How to cope with high interest rates and yet come out a winner ICICI Bank has decided to increase its base rate (I-base) by 25 basis points to 9.50 per cent with effect from Monday, the lender said, adding the interest rates on all new loans are being determined with reference to the I-base rate.
The bank also announced to increase the benchmark prime lending rate by 25 basis points. The decision would impact the customers who had taken loans from the ICICI Bank on floating rate of interest.
"The fixed rate customers will not be impacted by the ...increase and their contracted rates will remain unchanged", ICICI Bank said.
Since base rate came into effect last year, lenders like HDFC Bank and Axis Bank have increased their rates by 200 bps.
With Friday's increase, ICICI has also raised its rates by 200 bps.
CHECK OUT: Checklist for that home loan you want to take The benchmark prime lending rate of the Chennai-based IOB will go up from 14.25 per cent to 14.50 per cent with immediate effect.
IOB in a filing to the Bombay Stock Exchange (BSE) said: "The Board of Directors has approved the increase of the Benchmark Prime Lending Rate (BPLR) of the bank by 25 basis points from existing 14.25 per cent to 14.50 per cent."
Dena Bank decided to raise its base rate by 25 basis points to 10.20 per cent and its benchmark lending rate by a similar margin to 15.25 per cent. The new rates will be effective from tomorrow.
Private lender Dewan Housing Finance Corp also announced an increase of 25 basis points in its retail prime lending rate.
Since the RBI had raised its key policy rates by 25 bps at its mid-quarter policy review on June 16 - the 10th hike since March 2010 - many banks have hinted at hiking their lending rates.
Home loan offtake hit too as RBI increases key rates The Bangalore-based state-run lender Canara Bank on Thursday became the first lender to increase rates, when it announced 25 basis points hike in base rate and lending rates to 10.25 per cent and 14.50 per cent, respectively.
With the private sector leader ICICI Bank announcing rate hike, many more banks in the public and private sector are expected to announce similar increase in their lending rates.
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