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| More banks raise base rates |
| BS Reporter / Mumbai Oct 06, 2010, 00:21 IST |
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ICICI, Bank of Baroda, HDFC Bank follow RBI cues.
 A number of large lenders, including Bank of Baroda, HDFC Bank and Canara Bank, on Tuesday announced an increase in their benchmark lending rates, or base rates, joining the likes of Punjab National Bank and Axis Bank, which had raised their rates late last week.
The country's second largest lender ICICI Bank has raised its base rate by 25 bps to 7.75 per cent effective tomorrow. It has also increased deposit rates by 25-50 bps across various maturities effective tomorrow. Smaller banks like Kolkata-based UCO Bank, Federal Bank, Andhra Bank and Development Credit Bank also announced an increase in their base rates.
All corporate and retail loan rates linked to the base rate will go up.
GOING NORTH
BASE RATE |
| Bank |
Old rate |
New rate |
| HDFC Bank |
7.25 |
7.50 |
| Bank of Baroda |
8.00 |
8.50 |
| Canara Bank |
8.50 |
8.00 |
| Andhra Bank |
8.25 |
8.50 |
| UCO Bank |
8.00 |
8.50 |
| Federal Bank |
7.75 |
8.00 |
| HSBC |
7.00 |
7.50 |
| Development Credit Bank |
7.75 |
8.25 |
| All rate in per cent |
Public sector lender Bank of Baroda increased its base rate by 50 basis points (bps) to 8.5 per cent, effective immediately. “These interest rate increased are aimed at improving the transmission of monetary policy impulses,” the bank said in a statement. HDFC Bank, which at 7.25 per cent had the lowest base rate among the large banks, increased its rate by 25 bps to 7.5 per cent, effective from on Tuesday.
UCO Bank and private sector lender Development Credit Bank increased their base rates by 50 bps each to 8.5 per cent and 8.25 per cent, respectively.
Foreign lender HSBC raised its base rate by 50 bps to 7.5 per cent, effective from October 1. Andhra Bank increased its base rate by 25 bps to 8.5 per cent.
To bring in more transparency, base rate was introduced as a replacement to the benchmark prime lending rate (BPLR) from July 1 this year.
The central bank will draw comfort from the fact that banks have started reacting to monetary policy signals. The Reserve Bank of India (RBI) has increased policy rates by 100-150 basis points since April to tackle rising prices. Though banks have raised BPLR in recent times, this was intended to prompt customers to shift to the new base rate regime. The base rate is reviewed at least once every quarter.
The hike in base rates was kicked off last week by Punjab National Bank, IDBI Bank and Axis Bank. Rates in the short-term money market have hardened by over 150 basis points in last few months as banks have been raising resources through certificates of deposit.
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