MORE BANKS HIKE BASE RATE

Bank of Baroda, ICICI Bank, HDFC Bank and Development Credit Bank hiked their base rates by up to 50 basis points. This comes close on the heels of PNB, IDBI Bank, Allahabad Bank and Axis Bank and a host of other banks increasing their Base Rates.

ICICI Bank hiked base rate by 25 basis points from 7.5 to 7.75 per cent. The bank also hiked the interest rates on fixed deposits of various tenors by 25 to 50 basis points.

Bank of Baroda hiked its base rate by 50 basis points to 8.5 per cent. The public sector bank said it is raising the rate in response to the Reserve Bank of India's sustained monetary tightening and to lower the impact on cost of funds.

HDFC Bank raised its base rate by 25 basis points to 7.5 per cent from 7.25 per cent.

Andhra Bank increased the base rate from 8.25 per cent to 8.50 per cent.

Cost of funds up

Development Credit Bank increased its base rate by 50 basis points to 8.25 per cent from 7.75 per cent. Mr Murali Natarajan, Managing Director and Chief Executive Officer, DCB, said that the cost of funds has increased following the increase in deposit rates, especially in the shorter tenor. This has made it necessary to increase the base rate.

Following the hike in key short-term rates by the RBI, in September, most bankers had said that lending rates would move up only when credit picks up. Although credit growth has been below expectations so far, bankers expect it to gather steam from the third quarter onwards.

SBI, lone exception

Last week, banks such as Punjab National Bank, IDBI Bank and Allahabad Bank had increased their base rates from 8 per cent to 8.50 per cent. Axis Bank too upped its base rate by 25 basis points to 7.75 per cent.

However, the biggest bank, State Bank of India, has retained its base rate at 7.50 per cent.

UCO Bank hikes rate

UCO Bank has hiked its base rate by 50 basis points at 8.50 per cent (8 per cent) effective from October 5. . The revised rate would be applicable to all loans which are linked to base rate.

The bank has also upped the interest rates on term deposits by 25-100 basis points across various maturities effective October 6, according to a press statement issued by the bank.

Earlier, last week, Kolkata-based Allahabad Bank had increased its base rate by 50 basis points at 8.5 per cent (8 per cent) effective October 1.

Source: http://www.thehindubusinessline.com/2010/10/06/stories/2010100653670600.htm