HDFC Bank raises benchmark lending rate by 0.2%
New Delhi: Country's second largest private sector lender HDFC Bank has raised benchmark lending rate by 0.2 percent, a move which will make auto, corporate and other loans linked with base rate or the minimum lending rate costlier.
The base rate of the bank has been increased to 9.80 percent from 9.60 percent with effect from August 3, HDFC Bank Treasurer Ashish Parthasarthy told the agency.
Base rate is dependent on cost of deposit which have gone up in the recent past both on account of RBI measures and increase in short term deposit rates, he said.
On March 30, the bank reduced the benchmark lending rate from 9.7 percent to 9.60 percent after the Reserve Bank of India (RBI) cut its repo rate by 0.25 percent on March 19.
HDFC Bank becomes the second lender after Yes Bank to hike lending rate after the status-quo monetary policy review of RBI last week.
Weighed down by a weak rupee, the Reserve Bank chose to keep the repo rate or the rate at which RBI lends to the system, at 7.25 percent and the cash reserve ratio, the amount of deposits banks park with RBI, unchanged at 4 percent.
Yesterday, the rupee hit a intra-day record low of 61.80 against the dollar.
Last month, HDFC Bank had raised fixed deposit rates by 1 percent for maturities between 15 days to 6 months and one day effective July 27.
The bank increased the interest rate by 0.75 percent for maturity buckets less than 1 year but over 6 months one day.
"With hike in base rate we still remain one of the lowest in the market," Parthasarthy said.
In order to contain rupee depreciation, RBI has taken slew of measures in the past couple of weeks resulting in the tight liquidity situation for the banks.
The decline of the rupee to previous record low of 61.21 against the dollar on July 8 forced the RBI to take a series of unconventional measures to curtail liquidity and curb speculation.
On July 15, the Reserve Bank put in place measures to restore stability in the foreign exchange market, including raising the Marginal Standing Facility and bank rates to 10.25 percent and restricting access by way of repo window to Rs 75,000 crore.