Today SBI or the State Bank of India increased its rates on deposit in the tune of twenty five to twenty seven basis points but kept the base rate intact at seven decimal five percent.

Banks are not supposed to give loan below base rate. It is the minimum rate at which banks have to offer loans. From July all banks switched over to base rates so all loans sanctioned by banks have to keep parity with the base rates. Base rates are checked once in every three months.

Both these steps that were taken by the biggest lender of the country will make borrowers and depositors happy.

On September 16, when the Reserve Bank of India increased both its repo and borrowing rates by twenty five and fifty basis points equivalent to six and five percent respectively, people expected that banking institutions will also be increasing their base rates.

PNB and Allahabad bank, the state -run banking institutions have raised their base rates by 1/2 percentage points to become eight decimal five percent effective, tomorrow. Even deposit rates are increased by PNB in the tune of twenty five to fifty basis points.

A group of Experts opine that other banks will feel pressurized if they have to follow the SBI as a rate hike by them will make their loans expensive.

Another group of experts is of the opinion that until and unless banks increase their base rates margins will be less.

For its select maturities the term deposit rates have been increased by twenty five to twenty seven basis points by the SBI effective from tomorrow. 91-180 days deposits will receive five decimal five zero percent instead of four decimal seven five percent earlier.

Deposits made for one year to five fifty four days will fetch seven percent instead of the earlier six decimal seven five percent and deposits made for five fifty five days will fetch seven decimal five percent instead of earlier seven decimal two five percent.