SBI hikes interest rates ahead of RBI policy review

The State Bank of India (SBI) Thursday hiked deposit and lending rates, a day ahead of the monetary policy announcement by the central bank.

The decision by the country's largest lender will make home, auto and other loans costlier, which may impact demand negatively.

In a statement, SBI said it had raised the base rate to 9.8 percent per annum from the earlier rate of 9.7 percent. The new rate became effective from Thursday.

The Benchmark Prime Lending rate is also increased by 10 basis points to 14.55 percent per annum from the earlier rate of 14.45 percent.

These two rates determine the lending rates by the bank for home, auto and other loans.

The country's largest lender's decision on interest rates came just a day ahead of the monetary policy review by the Reserve Bank of India (RBI). The central bank is widely expected to keep the key policy rates on hold Friday.

SBI also hiked term deposit rates. The sharpest increase was in the 7 to 179 days tenor for which the interest rate is hiked to 7.5 percent from the earlier rate of 6.5 percent.

For the maturity period from one year and up to 10 years, the rate is increased to 9 percent from the earlier rate of 8.75 percent.

The bank has also decided to hike interest rate on term deposits from 180 to 210 days period to 6.8 percent from 6.5 percent and 211 days to less than one year period to 7.5 percent from 6.5 percent. These two rates will be effective from Friday.