Axis Bank raises benchmark lending rate by 0.25%

Private sector Axis Bank today increased benchmark lending by 0.25 per cent to 10.25 per cent making costlier the home, auto, corporate and other loans linked with base rate or the minimum lending rate.

The bank revised its base rate to 10.25 per cent effective from August 19, Axis Bank said in a statement.

All categories of loans (other than exceptions permitted by RBI) will become costlier at least by 0.25 per cent.

Earlier this month, the country's second largest private sector lender HDFC Bank had raised the base rate to 9.80 per cent from 9.60 per cent.

Meanwhile, some of the public sector banks like Andhra Bank have also raised base rate.

The country's largest lender State Bank of India has, however, gone public saying it will not cut its rates as it is flush with fresh deposits and its reliance on retail deposits.

SBI chairman Pratip Chaudhuri had said banks with excessive reliance on the wholesale funding are the ones raising the lending rates as the rates in the money markets hardened following the RBI moves.

Cost of funds have gone up for banks as the Reserve Bank has taken a series of steps to check the fall of rupee against the US dollar.

Weighed down by a weak rupee, the RBI chose to keep the repo rate or the rate at which it lends to the system, at 7.25 per cent. It kept the cash reserve ratio, the amount of deposits banks park with RBI, unchanged at 4 per cent at its recent policy review.

Earlier last month, the rupee had hit an intra-day record low of 61.80 against the dollar.

The decline of the rupee to previous record low of 61.21 against the dollar on July 8 forced the RBI to take steps to curtail liquidity and curb speculation.

On July 15, the Reserve Bank put in place measures to restore stability in the foreign exchange market, including raising the Marginal Standing Facility and bank rates to 10.25 per cent and restricting access by way of repo window to Rs 75,000 crore.