ICICI Bank has decided to increase its lending rate benchmarks — the base rate and the benchmark prime lending rate (BPLR) — by 25 basis points.
With effect from July 4, the revised base rate and BPLR of India's largest private sector bank will be 9.50 per cent (currently 9.25 per cent) and 18.25 per cent (18 per cent) respectively.
The bank has also upped its floating reference rate (FRR) for consumer loans (including home loans) by 25 basis points to 15.25 per cent (15 per cent).
BPLR and FRR are used for determining interest rates on loans and advances sanctioned up to June 30, 2010.
The fixed rate customers will not be impacted by the increase in BPLR and FRR and their contracted rates will remain unchanged, the bank said in a press release.
ICICI Bank had last hiked its base rate and FRR by 50 basis points each to 9.25 per cent (from 8.75 per cent) and 15 per cent (14.50 per cent) respectively in early May 2011.
The increase in lending rates by banks shows that the RBI's monetary tightening (to curb inflationary pressures) is getting transmitted, said a banker.
Since February 2010, the RBI has increased the repo (at which the RBI lends funds to banks) and the reverse repo (the interest paid by the RBI to banks on surplus funds parked with it) rates 10 times in response to rising inflationary pressures.
Cumulatively, the repo and the reverse repo rates have been increased by 275 and 325 basis points respectively.
Other banks
In the last couple of days, three public sector banks — Canara Bank, Corporation Bank and Indian Overseas Bank — have announced an increase in their lending rate benchmarks.
Canara Bank and IOB increased their base rate and BPLR by 25 basis points each to 10.25 per cent and 14.50 per cent respectively.
Corporation Bank increased its base rate by 35 basis points to 10.25 per cent.
Dena Bank has also increased its base rate and BPLR by 25 basis points with immediate effect.
In a press release issued on Friday, the bank said that the revised base rate would be 10.20 per cent (9.95 per cent) and the revised BPLR, 15.25 per cent (15 per cent).