Following hike in repo rates by Reserve Bank of India, the banks have started to hike lending and deposit rates. The major public sector bank, Punjab National Bank has raised its prime lending rate (PLR) from the existing level of 12.50% per annum to 13%. The new rates will be considered from July 1. PNB has also increased term deposit rates by 25-50 bps and the bank will pay a maximum of 9 per cent interest on term deposits after this hike. The bank has recently informed Bombay Stock Exchange in this regard.

The country's largest lender, State Bank of India (SBI) has increased interest rate by 15-75 basis points. This is the second revision in deposit rates by SBI in a span of 30 days. Other public sector bank, Mangalore-based Corporation bank has also raised deposit rates in the range of 25-100 bps. They have also hiked their prime lending rates (PLR) by 50 bps. Canara Bank has also raised its PLR by 50 bps to 13.25 per cent. But it did not change interest rates on auto and home loans.

Reserve Bank has recently hiked lending rate to curb the ever growing rate of inflation. The wholesale based inflation rate is now at 11.45 per cent. This hike in lending rates will help to curb the demand of rupee in market. Thus less flow of money in market will deter further increase in inflation. The rate of interest on home loans, vehicle loans and personal loans will also be hiked from immediate effect. Bank has also decided to increase its deposit rates ranging from 25 bps to 50 bps in some of the time slabs.