MUMBAI: The State Bank of India (SBI), India's largest commercial bank, has increased its benchmark lending rate by 75 basis points (100 basis points = 1 percentage point) but it has spared existing home loan customers who have borrowed Rs 15 lakh or less.

SBI has raised its benchmark prime lending rate (BPLR) or the rate it charges its most creditworthy customers, to 12.25%.

"Considering the importance of providing cost-effective credit to the important sectors of the economy, all existing housing loans under priority sector, existing educational loans, all existing and future agricultural production loans less than Rs 3 lakh and new educational loans up to Rs 4 lakhs will be excluded from the impact of the above change in State Bank advance rate," SBI said..

The rate hike comes a week after the RBI raised the cash reserve ratio the portion of deposits that banks have to keep with the central bank by 50 basis point to 6%.

Other major banks such as ICICI Bank, HDFC Bank, Bank of India, Union Bank of India, BoB and PNB have already hiked key lending rates.

HDFC is yet to take a decision on rates. But its chairman Deepak Parekh has hinted that the housing finance company is likely to hike rates by about 50 to 100 basis points.

"We will be taking a call on interest rates this week, taking into account impact of a higher cost of borrowing," Parekh said.

"There could possibly be a hike of 50 to 100 basis points," he told reporters. On whether existing borrowers will continue to enjoy prevailing rates, Parekh added that this too would be decided this week.

Source:Times of India

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