Canara Bank hikes lending rate by 0.25 per cent

Canara Bank hikes lending rate by 0.25 per cent

State-owned Canara Bank on Monday raised base rate or the minimum lending rate by 0.25 per cent to 10.20 per cent even as  Reserve Bank of India (RBI) kept its policy rates unchanged in its mid-quarter review earlier this month.

Canara Bank becomes the first major state-owned bank to increase base rate after RBI’s policy announcement, a move that will make loans, including home and auto, costlier.

The base rate stands modified from 9.95 per cent to 10.20 per cent, Canara Bank said in a filing to the BSE.

Base rate is the minimum lending rate below which banks can not lend to a borrower.

The bank has also aligned its benchmark prime lending rate to 14.45 per cent from 14.20 per cent, it said.

In tune with the market conditions, the bank has aligned its lending rates, it said, adding, the new rates would be effective from January 1.

On December 18, RBI in its mid-quarter review kept its policy rates unchanged.

RBI has kept short-term lending rate unchanged at 7.75 per cent, while the cash reserve ratio (CRR) remained at 4 per cent.

A day after RBI policy announcement, biggest housing financiers SBI, ICICI Bank and HDFC slashed home loan rates by up to 0.4 per cent for new borrowers.

SBI loans of up to Rs 75 lakh is available to fresh borrowers at 10.15 per cent against the existing rate of 10.50 per cent. For women borrowers, the rate of interest after an additional concession of 0.05 per cent is at 10.10 per cent for home loans of up to Rs 75 lakh.

The new rates for HDFC home loans of up to Rs 75 lakh will be 10.25 per cent as against the existing 10.50 per cent.