Country second largest private sector lender HDFC Bank has raised benchmark lending rate by 0.2 per cent,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 per cent from 9.60 per cent with effect from August 3,HDFC Bank Treasurer Ashish Parthasarthy said. 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 per cent to 9.60 per cent after the Reserve Bank of India (RBI) cut its repo rate by 0.25 per cent 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 per cent and the cash reserve ratio,the amount of deposits banks park with RBI,unchanged at 4 per cent.
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 per cent for maturities between 15 days to 6 months and one day effective July 27.
The bank increased the interest rate by 0.75 per cent 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 of India (RBI) put in place measures to restore stability in the foreign exchange market,including raising the Marginal Standing Facility and bank rates to 10.25 per cent and restricting access by way of repo window to Rs 75,000 crore.
HDFC Bank shares were down over 1 per cent at fag end of trading day.