After hiking its marginal cost of funds-based lending rates (MCLR) by up to 25 basis points (bps), India's largest bank SBI has increased its base rate and benchmark prime lending rate by 5 bps. A basis point is one-hundredth of a percentage point. Base rate has been increased from 8.65% to 8.70% p.a while BPLR has been revised to 13.45% as against the previous 13.40% p.a. The revised rates are applicable from April 1, 2018.
This is the first increase in the base rate in the last five years. With it, existing home loans from the bank will get marginally expensive. Analyst view the bank's call as a sign of gradually hardening interest rates. The last rate increase in both base rate and BPLR happened in 2013.
Meanwhile, Allahabad bank has reduced its lending rates, its base rate has been brought down to 9.15% while BPLR has come down to 13.40% in comparison to 13.85% p.a.
As per industry experts, the current move to change the lending rates is aimed at aligning base rate of the bank with its MCLR rate which is as per the RBI directive. So while some banks are reducing their base rates others are increasing them.