With the hike in the lending rates, home, auto and commercial loans will become expensive.
As many as a dozen banks, including private sector leader ICICI Bank have already hiked their lending rate by 25 basis points in response to the tightening of monetary policy by the Reserve Bank last month.
The RBI hiked key short-term lending and borrowing rates by 25 basis points (0.25 per cent) each with immediate effect to tackle inflation. The short-term lending (repo) rate rose to 7.5 per cent and the borrowing (reverse repo) rate at 6.5 per cent.
Last week, besides ICICI Bank, other public sector lender Canara Bank , Indian Overseas Bank, Corporation Bank and Dena Bank also hiked their base rate by 25 basis points each.
Since the introduction of the base rate system on July 1, 2010, the rate below which a bank cannot lend to anyone, leading banks have increased their base rates on an average of 200 bps.
South-based Dhanlaxmi Bank also hiked its minimum rate of lending or the base rate by 25 basis points to 10.25 per cent.
Loans under the older Benchmark Prime Lending Rate (BPLR) regime, which preceded the present base rate, also got dearer as the bank hiked the BPLR by 25 basis points to 19.25 per cent, it said in a release.
"The hike in our base rate and BLPR reflects tight monetary conditions and is in line with market trends," the bank's Chief Financial Officer Bipin Kabra said.
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