The State Bank of India (SBI) has raised its lending rate by 0.20%, following the recent hike in the repo rate by the Reserve Bank of India (RBI).

The RBI increased repo rate, which is the interest rate at which the central bank lends money to commercial banks, by 25 basis points on 29 October this year. The move by SBI comes after HDFC Bank increased its base rate by 0.20% to 10%.

Effective immediately, SBI has revised the base rate or the minimum lending rate from current 9.80% to 10%, and the Benchmark Prime Lending Rate (BPLR) from 14.55% to 14.75%.

The upward revision in the base rate is expected to increase equated monthly instalment (EMI) for home, auto and consumer durable loans.

SBI chairperson Arundhati Bhattacharya was quoted by The Financial Express as saying that the increase in base rate is because of increase in cost of funds, which increased 0.25% to 7.75%, and that the base rate is in line with the market.

With the revised rates, term deposit between 180-210 days less than INR10m ($159,700) can now earn 7% against 6.80% earlier.