United Bank hikes lending rate by 25 bps

Public sector lender United Bank of India today hiked its lending rate by 25 basis points (bps), a move set to make auto, home and corporate loans more expensive.

"...The bank has increased its base rate and prime lending rate by 25 bps to 10.25% and 14.50% respectively," United Bank said in a filing on the Bombay Stock Exchange (BSE).

The hike in both rates is effective from July 13, 2011.

Rate hikes by banks come in response to the interest rate hike by the Reserve Bank last month in its mid-quarterly review of credit policy 2011-12.

The RBI had on June 16 hiked its key short-term lending and borrowing rates by 25 bps (0.25%) each with immediate effect to tackle inflation. The short-term lending (repo) rate now stands at 7.5% and the borrowing (reverse repo) rate at 6.5%.

Following the RBI's decision, a number of banks have hiked interest rates in past few weeks.

United Bank's shares ended flat today on the BSE at Rs 96.25.

Source: Business Standard