The State Bank Of India (SBI), the country’s largest bank, will take a call on its lending rates on Monday in wake of the recent hike of benchmark repo rate by the Reserve Bank of India.
“Increase in repo rate does not affect landing rates of banks and especially of the State Bank of India. Deposit rates affect the landing rates. However, liquidity is tight in the market and we shall have to pass additional cost of liquidity on borrowers. So, we shall first increase deposit rates and then bank rates. We shall take a decision in this regard at our meeting on Monday,” SBI chairman Pratip Chaudhuri told reporters on the sidelines of a function organised by the bank here.
The RBI had increased repo rate by 25 basis points to 7.50 per cent in its mid-quarter monetary announcement on Thursday to counter mounting inflationary pressure.
Repo rate is the rate at which the central bank lends funds to other banks. Should the SBI increase its lending rates, interest rates of home loans, personal loans and auto loans would go up.
Chaudhuri was in the city to preside over a function of SBI to donate ambulances and school buses under its corporate social responsibility initiatives.