State Bank of India, the country's largest lender, has raised lending rates by 75 basis points (0.75 per cent), making all types of loans, including housing and auto, costlier for both new and existing borrowers.
Giving some relief to depositors, State Bank of India also hiked interest rates on fixed deposits of short term maturities by up to 225 bps.
SBI hiked base rate, or the minimum lending rate, by 0.75 per cent to 9.25 per cent. The hike is effective from May 12, SBI said in a statement.
SBI has also increased its benchmark prime lending rate (BPLR) by 75 BPS which would mean that existing borrowers will also have to pay more for their loans.
With this hike, SBI's BPLR goes up to 14 per cent. This will make equated monthly installments for existing loans dearer by at least 75 basis points.
Banks have been on a rate hike spree since the Reserve Bank of India's decision to raise short-term key rates in its annual credit policy on May 3.
Over a dozen banks, including Punjab National Bank, ICICI Bank, Oriental Bank of Commerce and Corporation Bank have raised interest rates in past one week.
Most of the banks hiked lending rates by 50 bps in the past one week.
SBI has taken a more aggressive stance by hiking lending rates by 75 basis points.
For depositors, interest rates have been hiked in maturities slab of up to 180 days to align this with the hike interest rate for savings bank accounts.
The Reserve Bank had upped the interest rates on savings bank accounts to 4 per cent from 3.5 per cent in its annual credit policy on May 3.
Interest rate for term deposit with maturity of 7-14 days will go up by 225 basis points to 6.25 per cent from existing 4 per cent, while 15-45 days fixed deposit will earn 125 bps more at 6.25 per cent.
For term deposits of 46-90 days of maturity, interest rate has been increased by 75 basis points to 6.25 per cent.
At the same time, 91-180 days fixed deposit will earn 7 per cent compared to 6 per cent.
The new deposit rates would also be effective from May 12.
Meanwhile, State Bank of Mysore has also raised its base rate and BPLR by 50 basis points, effective Wednesday.
Base rate of State Bank of Mysore would be 9.50 per cent compared to 9 per cent while BPLR will go up to 14.25 per cent.
