Five major commercial banks, including Punjab National Bank (PNB), Oriental Bank of Commerce (OBC) and Yes Bank, raised their lending rates on Wednesday making home, auto and corporate loans costlier. Other banks are expected to follow suit in the coming days.
The decision comes in response to the Reserve Bank of India's (RBI) decision to hike key short-term lending rates for banks on Tuesday as part of its tight money policy to control inflation.
PNB, OBC, Bank of Maharashtra (BoM), IDBI Bank and Yes Bank will hike their lending rates by 0.5 per cent. With the increase, the base rate or the minimum lending rate for PNB, OBC, IDBI and BoM will go up to 10 per cent, while that of private sector lender Yes Bank will be 9.5 per cent.
The benchmark prime lending rate (BPLR) of PNB now stands at 13.50 per cent, OBC (14.25 per cent), IDBI (14.50 per cent), BoM (14.25 per cent) and Yes Bank (19 per cent).
PNB chairman KR Kamath said the bank's board of directors has decided to increase its base rate and BPLR by 0.5 per cent with effect from Thursday. Both new and existing housing, auto and other loans will become costlier by at least 0.5 per cent.
Following this, IDBI Bank had raised its base rate and BPLR by 0.5 per cent each.
Yes Bank said it will also offer a higher rate of interest of four per cent on savings account deposits with immediate effect, according to a statement issued by the bank.
"While this benefit extended to depositors is expected to increase the cost of funds of the Bank by less than one basis point, the increase in base rate and BPLR will enable the bank to fully absorb the increased costs on account of rising interest rates," the bank said.
These measures will also serve the purpose of effective and immediate transmission of monetary policy objectives of the Reserve Bank of India, Yes Bank said.
Courtesy: Mail Today 
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