Union Bank hikes lending rate to 10 pct

8220;Arising out of increasing interest rate scenario,and due to higher Benchmark Policy Rates of RBI as well as increasing cost of deposits,Union Bank of India has revised Base Rate by 50 basis points from 9.5 per cent to 10 per cent8221;,the bank said in a filing to the Bombay Stock Exchange.

The revised rates will be effective from May 7,it added. The bank has also increased its Benchmark Prime Lending Rate BPLR from 13.75 per cent to 14.25 per cent with effect from Saturday. The Base Rate system replaced the BPLR system with effect from July 1,2010.

However,the BPLR is applicable for old customers who took loans earlier.

The higher lending rates would make loans dearer for both new and existing auto,home and corporate borrowers.

Union Bank8217;s move comes close on the heels of a similar decision by various lenders like YES Bank,Indian Bank,Punjab National Bank,Oriental Bank of Commerce,Bank of Maharashtra and IDBI Bank.

The RBI hiked the short-term lending repo rate and borrowing reverse repo by 50 basis points in its Annual Credit Policy Review on May 3.

The repo rate and reverse repo rate now stand at 7.25 per cent and 6.25 per cent respectively. The savings bank deposit interest rate have been increased by 50 bps to 4 per cent.

Shares of Union Bank jumped 10 per cent to close at Rs 319.65 on the Bombay Stock Exchange BSE.