Mumbai, Dec. 4: A day after HDFC raised interest rates, ICICI Bank increased by 50 basis points the floating reference rate (FRR) against which home and other consumer loans are benchmarked. The revised FRR now stands at 13.75 per cent.
ICICI Bank also raised its benchmark prime lending rate (BPLR) — against which corporate loans are benchmarked — by the same margin to 16.75 per cent.
In August, ICICI Bank had last raised both these benchmark rates by half a percentage point.
ICICI Bank said it was raising both these rates by 50 basis points with effect from December 6. Fixed rate customers would, however, not be impacted by this increase and their contracted rates would remain unchanged.
The hike in FRR will mean ICICI home loan customers will have to pay more equated monthly instalments (EMIs). However, only those who have taken loans up to June 30 will be affected by this revision as the banking system has since then moved over to a new rate called the base rate.
The base rate is the minimum lending rate that banks can charge their customers and all loans sanctioned since July 1 are benchmarked against this new rate.
However, there are many customers who have not shifted from BPLR to the base rate. ICICI Banks base rate called I-Base now stands at 7.75 per cent.
ICICI Bank did not state the reasons behind the increase in rates, but banking circles said it was because the cost of funds or the overall interest rates in the economy is inching up.
With credit demand picking up and liquidity crunch yet to ease, the State Bank of India today said it could hike deposit rates by 0.50 per cent or more by next week. Deposit rates could go up by 50 basis points or more, SBI chairman .P. Bhatt said.