As was expected of many banks, the second largest public lender, Punjab National Bank (PNB) and the Bank of Baroda (BoB) have followed the lead of SBI and UBI in hiking their Benchmark Prime Lending Rate (BPLR). BPLR is the interest rate that commercial banks charge their most credit-worthy customers.

Last week, SBI and UBI had responded to the hike in key rates proposed by the RBI, by hiking their BPLRs by 0.50% (50 basis points). Punjab National Bank (PNB) has increased the Benchmark Prime Lending Rate by 50 basis points (bps) from 12.50% to 13.00%. This revised BPLR shall be applicable to all existing and new accounts.

The bank had last revised the BPLR on April 16. However, a towering inflation of 13.42 percent has lead to the central bank in increasing the repo rate and CRR to 8.50% and 8.75% respectively. This has severely impacted PNB’s cost of funds, making it more expensive to borrow from the central bank. As was expected, this burden has been transferred to the customers.

However, the bank has also increased the deposit rates from 25 bps to 50 bps depending on different time slabs. It has increased interest rates on housing loans and auto loans by 50 bps. The revised Rates of Interest (ROI) on Single Domestic Term deposit for 7-14 days, below Rs 15 lacs will be 3.75% and for Rs 15 lacs & above but below one crore will be 4.25%. For 5-10 years, ROI will be 8.75% and 8.75%. These rates will come into effect from July 1.

Also effective from 1st July would be the revised rate of interest to be charged by BoB. Bank of Baroda (BoB) has also decided to increase its BPLR by 50 bps from the existing 12.75% to 13.25%.

BoB's announcement has followed those of major public sector lenders like the State Bank of India and PNB, both of which raised their BPLRs by 0.5% to 12.75% and 13%, respectively.