The second largest private sector lender of the country, HDFC Bank has increased its Benchmark Prime Lending Rate (BPLR) by 50 basis points. The BPLR of the bank now stands at 16.25% with immediate effect.

All loans associated with BPLR, including vehicle as well as personal loans would thus become costlier in the same proportion.

According to a senior HDFC Bank official, increasing cost of funds has provoked the bank to take such a move.

"Deposit rates in the banking system could move up further by 50-75 basis points by the end of the financial year. Depending on credit demand, base rate could also come up for review in October," said the official.

The saga of rising BPLR has been a continuous process since last month with a host of bank doing it one after the other. Among major players patry to the move include the largest lender of the country, State Bank of India, Punjab National Bank, ICICI Bank, Union Bank of India and IDBI Bank.

All of them have raised their respective BPLRs by 50-75 basis points on an average.