Feb. 3: Three more banks —Andhra Bank, Bank of Baroda and Union Bank — have announced a hike of 0.5 per cent in their base rates on Thursday.
These hikes would mean an increase in the interest rate that is being charged on loans. The base rate is the minimum rate at which a bank can make a loan, and interest rates on several loans are linked to the base rate.
The past week has seen more than half a dozen leading public sector lenders increasing interest rates. These rate hikes had come after the Reserve Bank of India had revised key policy rates late in January, in a bid to curb rising prices.
Earlier, at the beginning of the year, private sector lender ICICI Bank had revised its lending rates upwards. There had been a round of rate hikes in December as well.
Going ahead, most economists expect a further increase in interest rates from the RBI, leading to yet higher rates on loans. The higher borrowing cost will pinch the average household which may be serving multiple loans such as home loan, auto loan and personal loans.
Corporates are also going to be hurt by the high rate regime, which is starting as many of them are readying to make fresh investments post the recession.