Moreover, the interest rate of saving accounts deposits has also been increased to 4% by the bank as the result of the rate hike done by RBI yesterday. This step taken by the bank is anticipated to prove beneficial to the depositors and further is hopeful to bring in a rise in the cost of funds by lower than 1 basis points.
Pushing up the lending rates by the bank will aid the private lender in absorbing the higher costs totally.
The reason behind the substantial amount of rise brought in by the Reserve Bank of India is the high inflation prevailing in the economy.
In accordance with the RBI, controlling the rising inflation was the top most priority and it should be attained at any cost. However, SBI stated yesterday, this high amount of increase done in the key rates might affect the Indian economy in a bad way.