The State Bank of India, the largest bank in India has hiked the base rate on loans and fixed 9.80 % as its base rate. This is an increase of 0.10 % from the earlier base rate of 9.70 %. This is the consequence of announcing liquidity tightening moves declared by RBI in July. The decision on the increased rate was taken during the mid-quarter evaluation of the financial policy of the bank. As said by observers, Raghuram Rajan, the new Governor of RBI has been given some span to take an accommodating stand following the US Federal Reserve shockingly belated the reduction of liquidity infusion.
SBI as well increased the spreads on auto and home loans to the extent of 0.20 %, which will have an effect on new borrowers.