State-owned Oriental Bank of Commerce (OBC) on Wednesday said it has increased its base rate, below which banks can't offer loans, by 50 basis points to 8.5 per cent.
The base rate has been increased to 8.5 per cent with effect from October 1, said a senior bank official.
With the increase in base rate, all kinds of loans including housing, auto and education become dearer by at least 50 basis points (0.5 per cent).
Since last week, 11 banks including ICICI, HDFC, Punjab National Bank, IDBI Bank and Allahabad Bank have raised their base rates by up to 50 basis points.
Deposit rates and consequently cost of funds have increased, necessitating an increase in the base rate, the official reasoned.
According to the Reserve Bank of India guideline, 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.
The base rate was introduced as a replacement for benchmark prime lending rate (BPLR), in July this year, to bring in more transparency.
Several banks on Tuesday announced an increase in their base rate, including Bank of Baroda, HDFC Bank and ICICI Bank.
The revision in base rates follows RBI's move to raise short-term lending (repo) and borrowing (reverse repo) rates in its September monetary review.
Special 
