State bank of India (SBI), India’s largest lender, has increased its base rate and its benchmark prime lending rate (BPLR) by 75 basis points (bps) each, following the recent policy rate increases by the Reserve Bank of India (RBI).
The bank’s base rate, or the minimum lending rate, will be 9.25 per cent, while the BPLR will be 14 per cent from May 12. This is the steepest rate rise by a commercial bank since the last policy announcement. This is also the second rate increase by the state-run lender in a month. On April 25, the bank had raised its lending rates by 25 bps. According to RBI guidelines, banks can revise their base rates at least once every quarter.
“The increase in lending rates is in line with the policy rate rise by RBI earlier this month, which was aimed at curbing inflation,” said Managing Director and Chief Financial Officer Diwakar Gupta. He also said the bank did not expect a further increase in deposit rates after the latest rise.
Currently, the bank offers home loans at 100 bps above the base rate and car loans at 225 bps above the base rate. With this rate rise, the bank would now charge interest on home loans at 10.25 per cent and car loans at 11.50 per cent.
RBI had raised policy rates by 50 basis points in its annual monetary and credit policy announcement on May 3. The mid-quarter review is slated for June 16. After the rate increases by RBI, most banks had raised their lending rates. The base rates of a few banks have even touched double digits.