HDFC Bank hikes lending rate by 25 bps

The second-largest private sector lender HDFC Bank today followed its bigger peers to increase the base rate by 25 basis points (bps) to 9.5% and benchmark prime lending rate to 18%, a source familiar with the development told.

"The new rates will be applicable from tomorrow," the source said. The bank has also increased it deposit rate for the one-year-16 days bucket by 75 bps to 9.25 from 8.50%.

Earlier in the day, public sector lender Bank of India and the small-sized South-based lender Dhanlaxmi Bank also hiked their minimum rate of lending or the base rates by 25 bps each .

While Bank of India today increased lending rates by 25 bps to 10.25%, Dhanlaxmi also jacked up rate by a similar quantum to 10.25%, taking its benchmark lending rate dearer by 25 basis points to 19.25%. The private lender has also increased the deposit rate on select maturities by 100 bps.

Almost all the lenders have increased their rates by 25 bps after the RBI increased the key policy rates by 25 bps at its mid-quarter review on July 16, which was the 10th successive hike since March 2010, to tame inflation.

On July 7, the country's largest lender State Bank had increased its lending rates by 25 bps to 9.5% and raised deposit rates by up to 100 bps. The bank had also raised its benchmark lending rate to 14.25%.

ICICI Bank, Indian Overseas Bank, Corporation Bank, Dena Bank, Canara Bank and Bank of Baroda have been among those who have raised their lending rates.