SBI hikes PLR by 0.5% to 12.75%

All those loans which are linked to PLR including home loans will become costly with this decision.

It becomes first state-owned bank to revise rate after Reserve Bank of India hiked the repo rate by 50 basis points to 8.5 per cent and raised Cash Reserve Ratio (CRR) by 50 basis points to 8.75 per cent.

 

The cost of funds has been going up on two counts. First bank had recently revised the interest rates for medium and long term deposits. RBI has raised CRR, amount  banks have to keep with RBI in cash out of deposits for which they do not earn interest. Both put pressure on margins, senior SBI official said.

"We are restoring PLR to the old level (February 2008)" offcial said. India's largest lender had cut its BPLR in February 2008 by 50 points to 12.25 per cent.

The share of loans extended at floating rate is 84-85 per cent of advances.