IDBI hikes PLR by 50 bps, deposit by up to 75 bps

Public sector lender IDBI Bank today increased its lending rate by 0.50 per cent besides raising the deposit rates by up to 0.75 per cent.

Keeping in view the current interest rate environment we decided to increase our lending rate by 0.50 per cent with effect from tommorrow, the bank said in a statement here.

After the revision, the bank's retail lending rate stands at 13.25 per cent from the previous 12.75 per cent, effective tomorrow.

The maximum increase in the deposit rates is for deposits in more than three to five years tenor category, wherein the bank has hiked rates from existing 7 to 7.75 per cent. The new deposit rates will be effective August 6.

Deposits between five and seven years will see 0.25 per cent rise in returns at 7.75 per cent while the rates for deposits of over seven years has been left unchanged at 7.75 per cent.

IDBI's decision to increase its base lending rate comes within ten days of the Reserve Bank increasing its key lending and borrowing rates on July 27. The apex bank hiked the reverse repo rate, at which it absorbs excess liquidity from the system, by 0.5 per cent to 4.5 per cent and the repo rate, at which it lends to banks, by 0.25 per cent to 5.75 per cent.

Many banks including Kotak Mahindra, ICICI, Union Bank of India and Punjab National Bank among others, have raised their deposit rates, while others including SBI have admitted to an upward bias in deposit rates.