ING Vysya Bank raises BPLR

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New Delhi, Aug 1: ING Vysya Bank on Friday raised its benchmark prime lending rate (BPLR) by 50 basis points to 16.25% to offset the increase in key short-term lending rate and the reserve requirement announced by the Reserve Bank of India early this week.

Hike in BPLR automatically raises interest rates on home and auto loans. The new floating home prime lending rate offered by the bank is 16.25%.

The rise follows hike in various rates by banks like ICICI Bank, Punjab National Bank, HDFC Bank, Axis Bank, IDBI Bank and Yes Bank. Significantly, ING Vysya has raised its BPLR over 16% even as the top private lender ICICI Bank offers a PLR of 15% and SBI, the biggest bank in the country, 12.75%.

In its quest to moderate inflation, RBI on Tuesday raised the repo rate, the key rate at which the central bank lends short-term money to banks, to a seven-year high of 9% and the cash reserve ratio, the proportion of deposits banks have to park with the RBI, to 9%.

“The hike (announced by RBI) was more than expected by the market. With the inflation rate rising, we don’t see the interest rates going down in the near future,” ING Vysya Bank managing director & CEO Vaughn Richtor told reporters here.

The rise in BPLR would be effective from Friday and is the second in a month. The bank had hiked the key rate by 50 bps last month to 15.75%.

The private sector lender is also offering higher interest of 9% on 99-day deposit, increased from 7.5% earlier, and will announce the rate for other tenure in a week’s time.

ING Vysya has adopted a two-fold strategy for growth – expansion of branch network and deepening its relationship with customers by offering new products – to increase its market share. Under the strategy, it launched six branches in New Delhi and a new savings account – Formula Savings Account – on Friday.