Mumbai, Jan 29: The American Express Bank (Amex Bank) has hiked its prime lending rate (PLR) and medium-term PLR (MTPLR) by 400 basis points to 20 per cent, the highest among all banks operating in the country.Amex Bank's officials said that its new PLR and MTPLR was effective from January 28.
Like all foreign banks, Amex Bank's PLR revisions is also the second in succession after the Reserve Bank of India's (RBI) measures to suck out liquidity to prop up the rupee. The bank had first increased its PLR by 200 basis points to 16 per cent on January 21.
On the liability side, Amex Bank will offer 11 per cent on deposits of maturity 30-90 days, up from the earlier 7 per cent. On 91 day-1 year deposits, the interest rate will be 10 per cent (8 per cent). The bank has not revised the interest rate on 1-2 year deposit at 10.5 per cent and on 2 year and above liabilities at 11 per cent.
Amex bank's new deposit rates is effective from January. The bank's officials indicated that another hike in depositsrates, ``cannot be ruled out''.
Banking industry sources said that ``to the extent that Amex Bank has not revised its deposits rates upwards like a Bank of America or a ABN Amro Bank, it must be technically working on the extremely high spreads on an incremental basis".
Sources, however, surmised that the steep hike in the bank's PLR and MTPLR without a corresponding increase of the same nature in the interest rates offered on the liabilities side may indicate that Amex Bank might have been a heavy borrower in the overnight markets. ``The higher spread may help the bank to offset the increased costs on account of its overnight borrowings in recent times", said a banker.
ANZ Grindlays Bank and Bank of Novascotia were the first foreign banks to hike their PLRs a second time around.
ANZ Grindlays Bank increased its PLR by 200 basis points to 18 per cent while Bank of Novascotia pegged it at 18.5 per cent late last week. Others like Bank of America (BankAm) and ABN Amro bank now have a PLR of 18.5 percent while HongKongBank, Citibank and Standard Chartered Bank have the same at 17.5 per cent.
The tightness in liquidity has also seen foreign banks increasing their interest rates on short deposits.
ABN Amro Bank now offers 17.75 per cent on 46-60 day deposits, BankAm offers 15 per cent on 61-90 day deposit. HongKong Bank offers 12 per cent on deposit of up to 90 day maturity while Citibank has fixed the same at 10.5 per cent.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
