SBI hiked its base rate by 40 basis points to 8 per cent from 7.60 per cent per annum effective from 3rd January 2011 in line with peers and also increased its deposit rates by up to one per cent.
However, the fate of the teaser home loan scheme, an innovation by SBI in days of high liquidity to lend at low rates for retail customers, was not immediately known. A majority of banks who had followed SBI and introduced teaser rates have withdrawn lending under the scheme with the liquidity scenario getting tighter.
With the move to hike the base rate, both retail, including home and auto, and corporate loans will be dearer to new borrowers. SBI's move to hike its base rate comes the same day as ICICI Bank , Kotak Mahindra Bank and Dhanlaxmi Bank announced similar moves, driven primarily by a jump in cost of deposits.
Other banks which have tightened their base rates this month include Union Bank, Punjab National Bank , Bank of India, IDBI Bank , Indian Bank , Indian Overseas Bank , Allahabad Bank , Dena Bank and Standard Chartered Bank .
Besides the Base Rate, which was introduced in July to bring transparency in lending, SBI also upped its Benchmark Prime Lending Rate by 0.25 per cent to 12.75 per cent. The BPLR system preceded the base rate and many older accounts continue to operate under the system.
In another move, the bank raised its deposit rates by 0.50 per cent to 1 per cent depending on the maturity. This is the second time in the last month that the bank has hiked its deposit rates.
Under the new rates which will be effective January 3, a 1000 day deposit will fetch an interest of 9.50 per cent per annum as against 8.50 per cent earlier.
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