Three more banks jack up rates

Public sector lenders Punjab National Bank, Union Bank of India and Oriental Bank of Commerce today announced 75 bps increase in their prime lending rates (PLRs). The hikes will be effective from April 16. All the three banks have decided not to raise interest rates on home loans.

Citing rising cost of funds, PNB increased its PLR to 13 per cent from 12.25 per cent to protect its net interest margin (NIM) and guard profitability. The revised PLR will be applicable to all existing and new borrowers, it said. Oriental Bank of Commerce raised its PLR by 75 basis points from 12.50 per cent to 13.25 per cent. The bank attributed the decision to the recent hike in Cash Reserve Ratio (CRR) and increase in cost of funds. Union Bank's PLR has risen to 13.25 per cent from 12.50 per cent. "The increase in the PLR will help improve spreads and the bottom line of the bank," Union Bank said in a statement.

State Bank of India , the country's largest bank, raised its PLR by 50 bps to 12.75 per cent last week, including on existing home loans. Bank of Baroda had also raised its PLR by 75 bps to 13.25 but decided to increase the interest rates on existing home loans by only 50 bps.

ICICI Bank, the second largest bank, has increased lending rates by 100 basis points revising upwards its consumer PLR to 12.75 per cent and corporate PLR to 15.75 per cent. PNB said it will review home loan rates separately. Public sector banks, which are not increasing interest rates on their existing home loans, are likely to take a view after a meeting called by the Finance Minister P Chidambaram.