ICICI Bank raises both deposit & lending rates

 It has also announced an increase of 0.50 per cent in its benchmark prime-lending rate (BPLR) and in its floating reference rate (FRR) for consumer loans (including home loans) with effect from December 6, 2010, said an official comminique here.

However, the fixed rate customers will not be impacted by the above increase and their contracted rates will remain unchanged. The above benchmark rates are used for determining interest rates on new loans and advances including consumer loans which is determined with reference to ICICI Bank Base Rate (“I-Base”), which is currently at 7.75 per cent per annum.

The ICICI move comes a day after RBI Governor D Subbarao asked banks to hike deposit rates and lower lending rates, with a view to raising the level of national savings, as well as to encourage investments required for double-digit growth.

Contrary to RBI’s suggestion that banks should lower lending rates, ICICI has decided to increase benchmark prime-lending rate and its Floating Reference Rate (FRR) for consumer loans (including home loans).

The customers who have borrowed at fixed rates will not be impacted by the above increase and their contracted rates will remain unchanged. With effect from July 1, 2010, interest rate on new loans and advances including consumer loans is determined with reference to ICICI Bank Base Rate. The base rate is currently at 7.75 per cent.

It is to be noted that many banks including Punjab National Bank, Allahabad Bank, Syndicate Bank raised deposit rates recently to tide over tight liquidity situation.
Incidentally, on Friday, HDFC raised its benchmark lending rate by 75 basis points, making home loan dearer for both existing and new borrowers effective December 1.

Addressing bankers on Friday, Governor Subbarao had exhorted the banks’ support “to achieve our collective aspiration of double-digit and inclusive growth, we need to raise the level of national savings and channel those savings into investment... This means banks need to raise the interest rates offered to depositors and reduce the lending rates charged on borrowers.”