Indian Bank raises base rate, BPLR

Joining the rate hike bandwagon, state-run lender Indian Bank on Thursday raised its lending rates by 50 basis points, within days of the Reserve Bank of India (RBI) announcing an increase in its short-term lending and bank savings rates.

The sixth bank to announce the rate hike after RBI’s move, the PSU lender has upped its base rate from 9.50 per cent to 10 per cent per annum, while increasing its benchmark prime lending rate (BPLR) to 14.25 per cent from 13.75 per cent earlier.

The new rates would be effective from May 5, 2011, Indian Bank said in a filing to the Bombay Stock Exchange.

Already, five leading banks, including Punjab National Bank (PNB), Oriental Bank of Commerce (OBC) and YES Bank, have increased their interest rates by half a percentage point with effect from on Thursday, making all loans costlier.

The announcements to hike rates came within a day of RBI hiking its lending and borrowing rates by 50 basis points each.

PNB, OBC, Bank of Maharashtra (BoM), IDBI Bank and YES Bank have also hiked their lending rates by 50 basis points.

With the increase, the base rate or the minimum lending rate for PNB, OBC, IDBI and BoM will stand increased to 10 per cent, while that of private sector lender YES Bank will be 9.50 per cent.

Besides, the BPLR of PNB stands at 13.50 per cent, OBC (14.25 per cent), IDBI (14.50 per cent), BoM (14.25 per cent) and Yes Bank (19 per cent).

The higher lending rates would make loans dearer for both new and existing auto, home and corporate borrowers.

Besides, state-run IDBI Bank would hike the retail term deposit rates by 25-50 basis points in different maturity buckets and private sector YES Bank has increased the savings account deposit rates by 50 basis points to 4 per cent from on Thursday, thereby benefiting small savers.

The RBI on Tuesday hiked the repo and reverse repo rate to 7.25 per cent and 6.25 per cent respectively, besides, raising the savings bank deposit interest rate to 4 per cent, from 3.5 per cent. Bank savings deposit rate is currently regulated by the Reserve Bank.