SBI up lending rate by 10 bps to 7.6%

State Bank of India (SBI) increased base rate or the minimum lending rate for the new borrower by 10 basis points to 7.6 %, a move that would make all kinds of advances, including corporate loans, costlier.
The bank has revised the base rate below which bank cannot offer loans, upwards by 10 basis points from 7.5 % to 7.6 %, effective from October 21, 2010, SBI informed the Bombay Stock Exchange.
This is the first review of the base rate since it was introduced in July this year. As per the RBI guideline, banks have to review their base rate every quarter.
With the increase in base rate, all kinds of loans excluding housing and auto loans would be dearer by at least 10 basis points (0.1 %).
Currently, SBI is offering teaser home and car loan till December and rates would be as announced earlier.
The revision in base rate follows the RBI's move to raise short-term lending (repo) and borrowing (reverse repo) rates in its September monetary review.
In order to bring in more transparency, the base rate was introduced as replacement for the Benchmark Prime Lending Rate (BPLR) from July 1 this year.
SBI has also raised BPLR for the existing customers by 25 basis points to 12.5 % from earlier 12.25 %. The new rate would be effective from tomorrow.
Earlier this month, SBI hiked fixed deposit rates by up to 75 basis points. The bank raised deposit rates from 25-75 basis points (0.25-0.75 %) across various maturities.
For 91-180 days term deposits, SBI provides 5.5 % interest, up 75 basis points from the existing rate.
A fixed deposit with maturity period between 1 year and 554 days was raised by 25 basis points to 7 %, while deposits for 555 days would attract 7.5 %.
The interest rate on term deposits of between 556 days and 1,000 days under different slabs, has been increased by 50 basis points, to 7.75 %.

Govt plans low rates home loans for paramilitary personnel

In an attempt to make home ownership easier for paramilitary personnel, the Central government is planning to launch a scheme under which home loans are made available to them at concessional rates. “The scheme will allow a soldier from a paramilitary force to avail cheaper home loans at least two years prior to his retirement,” a senior home ministry officer told Hindustan Times.
The official added that the government is formulating the exact modalities of this scheme, such as loans rates and tenures and has initiated talks with several banks for its implementation.
“The State Bank of India has in-principle agreed to be part of this scheme,” the official said.
In fact, SBI has already been closely associated with the armed forces. The bank had recently launched Defence Salary Package (DSP) for the Indian Army whereby it aims to open close to 12 lakh accounts of Army personnel under the scheme.
The DSP offers free drafts, cheque books, fund transfers and ATM cards to the soldiers of Indian Army to any of SBI Group’s over 15,000 branches.
The scheme also offers home, auto and personal loans to Army personnel at 25 basis points lower than the floor rate.