Pune based Bank of Maharashtra today became second public sector bank to raise its base rate. The bank has raised its base rate by 25 basis points to 10.25 from August 26, it said in a filing to exchanges.
Previously Andhra Bank had raised its base rates after RBI took steps to shrink liquidity in the market to address the volatility in Rupee.
All the major private banks have revised their base rates in last few days. Yesterday ICICI Bank had raised its base rate by 25 basis points to 10 per cent. Similarly country’s biggest mortgage lender HDFC raised its lending rate by 25 basis points.
Large public sector banks however have still not raised their lending rates.
While RBI had kept the policy rate unchanged in its first quarter monetary policy review, its liquidity tightening measures in the past few weeks have impacted short-term rates. On July 15, 2013 the central bank capped banks' borrowings under the liquidity adjustment facility (LAF) and increased the marginal standing facility (MSF) rate by 200 basis points to 10.25 per cent.
The measures led to tightness in liquidity. Bankers had predicted if the steps were not rolled back soon short-term deposit rates would rise followed by increase in lending rates.