Allahabad Bank to raise base rate, BPLR

Allahabad Bank has said it would raise its base rate and the benchmark prime lending rate (BPLR) by 50 basis points (bps) from August 1. The rate increase would increase the bank’s base rate to 10.75 per cent and the BPLR to 15 per cent. The bank had last raised the two rates by 25 bps on July 15.

Meanwhile, Punjab & Sind Bank has raised its base rate and BPLR by 50 basis points to 10.75 per cent and 15.25 per cent, respectively. Public sector lender Corporation Bank revised its base rate from 10.25 per cent to 10.65 per cent. It also raised the BPLR from 14.50 per cent to 15 per with effect from August 1, the bank said in a statement.

“RBI has raised the repo and reverse repo rates to check inflation and banks are the medium for this policy transmission,” Allahabad Bank chairman and managing director J P Dua told Business Standard.

Commenting on the effect on credit off-take following successive rate rises by RBI, Dua said credit growth would definitely moderate in the coming weeks, though there is a lag period for such policy changes to take effect. In the last 15 months, RBI has raised the repo and reverse repo rates by three per cent and 3.5 per cent, respectively, to check runaway inflation, which has, so far, fetched less-than-desired results.

“These are challenging times and the banking sector has to take care of the asset quality, while the net interest margins (NIMs) are likely to come under pressure,” Dua said, adding, the bank was able to show consistent growth in the first quarter of the current financial year.

“Our NIM during the quarter was 3.4 per cent, compared with 3.10 per cent during the first quarter of 2010-11 and 3.38 per cent during the last financial year,” he said. The bank’s total business crossed Rs 2,32,500 crore in June. Allahabad Bank plans to open 155 new branches and 500 new automated teller machines across the coutry in the current financial year.