State Bank of Travancore, Union Bank raise lending rates by 50 bps

NEW DELHI: State-owned lenders Union Bank and the State Bank of Travancore (SBT) on Friday raised their lending rates by 50 basis points, following the hike in key policy rates by the Reserve Bank last month.

After the rate increase, Union Bank's base rate, or the minimum lending rate, would be 10.75 per cent per annum, while SBT's rate would stand at 9.75 per cent, the banks said in two separate statements.

Besides, SBT raised its benchmark prime lending rate (BPLR) from 14.50 per cent to 15 per cent. The new rates would be effective from Monday, August 8, 2011.

SBT and Union Bank have joined a host of private sector and PSU lenders, including State Bank of Mysore, HSBC, United Bank and Dena Bank, who followed the monetary action by the RBI on July 26 and many more are likely to do so in the coming days as cost of funds has gone up.

Earlier during the day, country's largest lender State Bank of India indicated it could raise interest rates by up to 50 basis point next week.

The interest rate hike comes after the RBI raised its key policy rates last week by a hefty 50 basis points to check high inflation in its July 26 monetary policy review.

The short-term lending (repo) rate of RBI now stands at 8 per cent and the short-term borrowing (reverse repo) rate at 7 per cent.

Subsequently, the interest rate under the Marginal Standing Facility, an additional borrowing window, has gone up to 9 per cent from the earlier level of 8.5 per cent.

Source: EconomicTimes