Second to hike minimum lending rate after Yes Bank
HDFC BANK, the second largest private sector bank in the country, has increased its base rate by 20 basis points to 9.8%. The rate hike is effective from August 3, 2013.
The private lender became the second bank to hike its minimum lending rate after the Reserve Bank of India's (RBI) first quarter monetary policy review on July 30, 2013.
Earlier, Yes Bank had increased its base rate by 25 basis points to 10.75%.
Prior to the base rate hike, HDFC Bank had raised its deposit rates on maturities ranging from seven days up to six months by 100 basis points. Rival Axis Bank had also increased short-term deposit rates by 50-225 basis points even though the private lender is yet to revise its lending rate.
While RBI has kept the key policy rate unchanged in its monetary policy review, its liquidity tightening measures in the past few weeks have impacted the short-term rates.
The central bank on July 15, 2013 capped bank's borrowings under liquidity adjustment facility (LAF) and increased the marginal standing facility (MSF) rate by 200 basis points to 10.25%.
The measures have led to an increase in cost of funds and bankers had said if the steps are not rolled back soon their margins will get affected. Bankers also indicated that if deposit rates hardened, they will have to increase lending rates to protect their margin.
HDFC BANK, the second largest private sector bank in the country, has increased its base rate by 20 basis points to 9.8%. The rate hike is effective from August 3, 2013.
The private lender became the second bank to hike its minimum lending rate after the Reserve Bank of India's (RBI) first quarter monetary policy review on July 30, 2013.
Earlier, Yes Bank had increased its base rate by 25 basis points to 10.75%.
Prior to the base rate hike, HDFC Bank had raised its deposit rates on maturities ranging from seven days up to six months by 100 basis points. Rival Axis Bank had also increased short-term deposit rates by 50-225 basis points even though the private lender is yet to revise its lending rate.
While RBI has kept the key policy rate unchanged in its monetary policy review, its liquidity tightening measures in the past few weeks have impacted the short-term rates.
The central bank on July 15, 2013 capped bank's borrowings under liquidity adjustment facility (LAF) and increased the marginal standing facility (MSF) rate by 200 basis points to 10.25%.
The measures have led to an increase in cost of funds and bankers had said if the steps are not rolled back soon their margins will get affected. Bankers also indicated that if deposit rates hardened, they will have to increase lending rates to protect their margin.
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