Also increases the spread for auto as well as home loans
State Bank of India (SBI), on Thursday, raised its Base Rate or the minimum rate of lending to 9.80 per cent, and the Benchmark Prime Lending Rate to 14.55 per cent, besides hiking the retail deposits (below Rs.1 crore) rate.
The bank has also increased the spread for auto as well as home loans and loans for mid and large corporates, which avail themselves of funds above Rs.5 crore. The spread is the rate added over and above the Base Rate.
“State Bank of India has revised the Base Rate by 10 basis points (bps) from 9.70 per cent to 9.80 per cent per annum, and the Benchmark Prime Lending Rate by 10 bps from 14.45 per cent to 14.55 per cent per annum with effect from September 19,” the bank stated in a release on Thursday.
It has also revised upwards its retail term deposit rates below Rs.1 crore — 7-179 days: from 6.50 to 7.50 per cent per annum (with effect from September 19); 180-to 210 days: from 6.50 to 6.80 per cent per annum (with effect from September 20); 211 days to less than one year: from 6.50 to 7.50 per cent per annum (with effect from September 20), and one year and up to 10 years: from 8.75 to 9 per cent per annum (with effect from September 19).
“The liquidity has been coming at a higher cost after the liquidity tightening measures announced by the Reserve Bank of India on July 15, and recently we increased the bulk deposit rates… today this increase, we extend to retail deposits also.
“But we need to pass on the additional cost to borrowers,” Saraswathy Atmanathan, Chief General Manager, Asset Liability Management (ALM), SBI, told <ju>The Hindu.
The RBI had announced a slew of measures on July 15 to stem the fall of rupee, by sucking out liquidity in the system while hiking rates of short-term funding.
“Our lending rates were the lowest in the market, and now we are coming closer to the market rates, but still we are below the market rates,” said Ms. Atmanathan.
“After the RBI measures, SBI has not increased the rates as they have good liquidity, and is hoping that the measures will be short-term,” said Pritesh Bumb, Analyst, Prabhudas Lilladher, adding that, “looking into their cost of funds they would have increased the lending rates.”