Mumbai, Apr 8: The nation's largest public-sector bank, State Bank of India's (SBI), prime lending rates (PLRs), which have been hiked by 0.50 per cent from 12.25 per cent to 12.75 per cent, will come into effect from tomorrow.

Several other banks like ICICI Bank and HDFC have already raised their PLRs by one per cent, while Bank of Baroda (BoB) has increased it's PLR by 75 basis points, an official release here said.

Banks are increasing interest rates following the Reserve Bank of India's (RBI's) decision on Mar 30 to hike the repurchase rate (repo rate), the rate at which it lends to banks, and the cash reserve ratio (CRR), deposits all banks must keep with it.

The Central bank's move was motivated to check high credit growth and arrest inflation, which still hovers at more than six per cent.

''The RBI in it's bid to moderate inflation is tightening the screws on liquidity. Purchase of homes will now be delayed as the equated monthly installments (EMI) will work out to be more expensive. A person who had taken a home loan at the floating-rate of eight per cent a year ago, is now required to pay at a rate of 12 per cent. This implies that there is a 50 per cent increase in the interest amount,'' economists pointed out.

''An average salaried person has already divided his salary between the EMIs and other household expenses. Now how will he manage in an additional 50 per cent increase in expenses on account of the hiked interest rates,'' market analysts noted.

UNI