A recent press report said that Union Bank and the State Bank of Travancore (SBT) have raised their lending rates by 50 basis points, following the hike in key policy rates by the Reserve Bank last month. Union Bank’s new base rate, or the minimum lending rate, would be 10.75 percent per annum, while SBT”s rate would stand at 9.75 percent.
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Reports said that SBT has raised its benchmark prime lending rate (BPLR) from 14.50 percent to 15 percent. SBT and Union Bank have hiked their rates along with other private sector and PSU lenders, including State Bank of Mysore, HSBC, United Bank and Dena Bank, who followed the monetary action by the RBI.
Reports also said that country’s largest lender State Bank of India has also indicated that it could raise interest rates by up to 50 basis points in the following week.The short-term lending (repo) rate of RBI now stands at 8 percent and the short-term borrowing (reverse repo) rate at 7 percent.
The hike in interest rate will affect the borrowers of the bank. This is likely to make home loans, personal loans, car loan, mortgage loan and other loans of the bank dearer to its