"The bank has revised the benchmark prime lending rate upwards by 50 basis points from 11.75 per cent per annum to 12.25 percent per annum effective from August 17," SBI said in a statement to the Bombay Stock Exchange.
In a separate statement,, the country’s largest lender said it would also raise deposit rates between 25 to 150 basis points depending on the maturity period.
The highest increase of 150 basis points will be for the term deposits with maturity period between 15 to 45 days. While the interest rates on fixed deposit with a maturity period of 5 to 8 years will witness the lowest increase of 25 basis points.
This is the first increase in lending and deposit rates by SBI since the Reserve Bank of India (RBI) started tightening monetary policy in March.
The country’s central bank has raised reverse repo rate (the rate at which RBI borrows money from banks) by 125 basis points, and repo rate (the rate at which the central bank lends money to bank), cash reserve ratio and statutory liquidity ratio by 100 basis points each since March.
The most recent hike was on July 27, when the RBI raised the short-term borrowing rate by 50 basis points and lending rate by 25 basis points.
Meanwhile, the bank announced that it would launch a new scheme linked to base rate. "The bank announces launching of floating rate term deposit products linked to base rate effective from September 06, 2010," SBI said in a statement.
In response to the RBI’s tight monetary policy, several other public sector banks have also revised upwards their lending and deposit rates. Punjab National Bank, the country’s second largest lender, has increased its benchmark prime lending rate by 75 basis points. This is the sharpest increase among all lenders.
Bank of Baroda, Corporation Bank and Oriental Bank of Commerce have also increased their benchmark lending rates by 50 basis points.
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