State Bank of India and ICICI Bank made new and existing loans expensive on

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Thursday by raising base rates by 50 basis points to 10 per cent.

The move follows 50 basis points increase in policy rates by the Reserve Bank of India on July 26. SBI and ICICI Bank are last among major banks to pass the rate hike to customers.

SBI controls around 15 per cent of bank credit while ICICI Bank’s share is about five per cent.

In 2010-11, SBI’s advances to companies were around Rs 3,86,000 crore. ICICI Bank and SBI had raised rates by 25 basis points on July 1 and July 7 this year.

The increase in interest rates by RBI has given rise to concerns about defaults in bank loans. In the past year, non-performing assets or bad loans of SBI have been rising, while those of ICICI Bank have been falling.

Interest rates have risen by 300-350 basis points since March 2010.

Home loan rates will now rise to 11-11.75 per cent depending on the amount. A 50 basis points increase in interest rate will raise the EMI on a home loan of

Rs 20 lakh by Rs 450-500.

With the latest increase, interest rates on loans have reached levels that existed before November 2009 when SBI launched a teaser or special home loan scheme offering home loans at 8 per cent in the first year. Other banks followed suit making home loans cheaper.

SBI will charge 11 per cent for loans up to Rs 30 lakh, 11.25 per cent for loans between Rs 30 lakh and Rs 75 lakh, and 11.75 per cent for home loans above Rs 75 lakh. SBI’s total home loan portfolio is over Rs 85,000 crore. Over 40 per cent of its customers are on base rate system. Interest rate on SBI’s car loan will be 12.25 per cent.

Even though banks have raised lending rates, there has not been much gain for depositors. SBI has raised interest on deposits of 180-240 days by 50 basis points to 7 per cent and has left rates on other maturity brackets unchanged. The minimum interest paid by SBI on deposits is 7 per cent and the maximum is 9.25 per cent. It pays higher interest of 7.25 per cent on 91-175 day deposits.

ICICI Bank has not announced any change in deposit rates.

“We had to pass on the hike as our cost of funds has gone up. Interest on deposits is already peaking (and) that’s why we have not made any major change in deposit rates,” said a SBI official. The new interest rates will be effective from August 13.