SBI Announces Significant Hike in Loan Interest Rates
Effective from May 12, 2011
State Bank of India (SBI), the country's largest lender, has declared a substantial increase in loan interest rates by 75 basis points (bps). This move will make housing, auto, and other loans more challenging for both new and existing borrowers.
Key Rate Adjustments:
- Base Rate Increase: The minimum lending rate has been elevated by 0.75% to 9.25%.
- Standard Prime Lending Rate (SPLR) Adjustment: An increase of 75 bps, resulting in the SPLR rising to 14%. This change will impact current borrowers, necessitating higher loan repayments.
- Deposit Rate Revision: Select maturities (04) will witness an increase in deposit rates by up to 225 bps.
Industry Context:
The hike in SBI's lending rates closely follows the Reserve Bank of India's (RBI) decision to raise short-term key rates by 50 bps in its annual credit policy on May 3, 2011. This move has triggered a rate hike spree among banks, with over a dozen institutions, including:
- Punjab National Bank (PNB)
- ICICI Bank
- Oriental Bank of Commerce
- Corporation Bank increasing their interest rates within the past week.