APRIL 7, 2007: The State Bank of India
(SBI) today raised its benchmark prime lending
rate (BPLR) by 50 basis points to 12.75
per cent. SBI’s decision follows the
Reserve Bank of India’s (RBI) move
to raise both the cash reserve ratio (CRR)
by half a per cent and the repo rate by
25 basis points last week.
SBI was, however, silent on whether home
loan rates would stand increased following
the hike in PLR. A terse communique issued
by the bank only spoke about the new PLR.
Sources said interest rates on housing
loans will be raised by around 50 basis
points. SBI officials were, however, not
available for comment.
The country’s largest bank has increased
the benchmark rate, known as the State Bank
Advance Rate (SBAR), on two occasions in
the past four months. It had increased the
benchmark rate, which is used to price corporate
and retail loans by 25 basis points in December
last year and later increased it by 75 basis
points again in February.
However, on the second occasion, SBI had
excluded all existing housing loans and
educational loans, existing and future agricultural
production loans of less than Rs 3 lakh
and new educational loans of up to Rs 4
lakh from the change in the SBAR. The new
SBAR will come into effect from April 9.
For floating rate home loans, the bank
levies an interest rate of 10.25 per cent
for up to five years and it stands at 10.75
per cent for advances between five to 20
years.
Similarly, the interest rate for fixed-rate
loans is 12.25 per cent for 10 years. However,
in fixed-rate housing loans, the bank can
enforce a ‘force majeure’ clause
by which they could be subject to a reset
clause in every two years.
Though reports state that SBI has yet again
decided not to raise interest rates for
its home and education loan customers, it
is understood that interest rate on its
floating rate home loans could now go up
to 10.75-11.25 per cent and it will stand
at 12.75 per cent for fixed rate advances.
This, however, could not be confirmed from
the bank.
SBI is the second public sector bank after
Bank of Baroda (BoB) to increase its benchmark
rate. Earlier this week, BoB increased its
BPLR by 75 basis points to 13.25 per cent.
Though the bank raised interest rate on
home loans by 50 basis points, there was
no change in interest rates on educational
loans of up to Rs 4 lakh. For a loan of
more than Rs 4 lakh, the interest rate was
increased by half a per cent. Interest rate
on auto loans was increased by 75 basis
points.
Meanwhile, the Industrial Development Bank
of India is planning to review its current
lending rate in view of the changing trend
in the financial market, IDBI chairman and
managing director V.P. Shetty said today.
The bank had not hiked its rates in the
last two months. However, now it would review
its current BPLR pegged at 12.75 per cent.
Source: The Telegraph
