Axis Bank loans to get costlier as it raises benchmark lending rate

Axis Bank has increased benchmark lending rate by 0.25 per cent to 10.25 per cent, making home, auto, corporate and other loans linked with base rate costlier.

The bank revised its base rate, or the minimum lending rate, to 10.25 per cent effective from August 19. All categories of loans (other than exceptions permitted by RBI) will become costlier at least by 0.25 per cent.

Earlier this month, the country's second largest private sector lender HDFC Bank had raised the base rate to 9.80 per cent from 9.60 per cent. Some public sector banks like Andhra Bank have also raised base rate.

State Bank of India, the country's largest lender, has, however, gone public saying it will not cut its rates as it is flush with fresh deposits and its reliance on retail deposits.

SBI chairman Pratip Chaudhuri had said banks with excessive reliance on the wholesale funding are the ones raising the lending rates as the rates in the money markets hardened following the Reserve Bank of India (RBI) taking measures to check the fall of rupee against the US dollar.

Earlier in July, the rupee had hit an intra-day record low of 61.80 against the dollar.

On July 15, the RBI put in place measures to restore stability in the foreign exchange market, including raising the Marginal Standing Facility and bank rates to 10.25 per cent and restricting access by way of repo window to Rs 75,000 crore.

The central bank also chose to keep the repo rate, or the rate at which it lends to the system, at 7.25 per cent. It kept the cash reserve ratio, the amount of deposits banks park with RBI, unchanged at 4 per cent at its recent policy review.

With inputs from PTI