The State Bank of India (SBI), the country's largest public sector lender, will hike the benchmark prime lending rate (BPLR) by 70 basis points with effect from March 15.
The 0.7 percent jump in the key lending rate will push it to 14.85 percent.
SBI will also be raising its base rate by 70 bps to 10.10 percent effective from March 15. The lender had last made an upward revision in BPLR and base rate on December 15.
The hike has been announced by SBI a month after the Reserve Bank of India (RBI) raised the repo rate, or the rate at which it lends short-term funds to commercial banks, to 6.50 percent from 6.25 percent.
While SBI has increased BPLR and its base rate, the bank has not made any changes to its marginal cost lending rate (MCLR), at which it lends out loans to customers.
SBI had last raised MCLR by 10 bps on February 15, which led to the overnight marginal cost lending rate increasing to 7.95 percent from 7.85 percent, and one-month and three-month MCLR rising to 8.10 percent from 8.00 percent, respectively.
The jump in lending rates is seen as a ripple effect of the rate hikes being implemented by the Monetary Policy Committee of the RBI since mid-last year, in a bid to tame inflation.
The countrywide retail inflation eased to 6.44 percent in February 2023, but continues to remain above the RBI's upper-level tolerance limit of 6 percent. This leaves the room open for further rate hikes by the central bank, as per experts.