All these banks have hiked deposit and lending rates by different amounts; decisions follow RBI’s tightening of policy rates last week
New Delhi: Seven banks, including Bank of Baroda (BoB) and HDFC, raised deposit and lending rates by up to 50 basis points on Tuesday, after the Reserve Bank of India tightened monetary policy last week.
BoB and Oriental Bank of Commerce (OBC) raised deposit rates, while HDFC, Indian Bank, Indian Overseas Bank (IOB), Bank of India (BoI) and Dena Bank hiked lending rates.
Higher deposit rates will give depositors better returns, but the increased lending rates will impact EMIs for auto and home loan borrowers. Corporate loans would also become more expensive, reports PTI.
BoB raised deposit rates by 50 basis points (bps) to 9.10% for 444-days deposits till March 2011 and 8.75% for deposits of one year up to 443 days, with effect from today.
OBC decided to raise fixed deposit rates by 25 basis points for deposits of different maturities with the highest rate of 9.25% for 500-days deposits.
Housing finance lender HDFC also raised its floating interest by 25 bps with effect from Tuesday, for existing and new customers. HDFC has increased its retail prime lending rate, on which its adjustable rate home loans is benchmarked by 25 bps. "This is in line with the interest rates in the economy, which have hardened due to an increase in policy rates, inflation and liquidity in the domestic market," HDFC stated.
Indian Bank and IOB announced an increase in the base lending rate by 50 bps to 9.5% with effect from Tuesday while Dena Bank has raised its base rate by 0.5% to 9.45% with effect from today.
BoI raised its base rate and BPLR by 50 bps to 9.5% and 13.75%, respectively, which will take effect on Thursday.
Banks have been raising interest rates following the 25 bps hike in short-term lending (repo) and borrowing (reverse repo) rates by the RBI at its third quarterly review of the monetary policy last week.
Punjab National Bank, Allahabad Bank and Punjab and Sind Bank have already announced similar hikes in deposit and lending rates.