The hike comes a month after a 0.05 percentage point increase in January, and ten days after rival HDFC Bank increased its lending rate.
The new interest rates will be applicable to new loans, the bank said.
With the latest interest rate hike, the gap between what HDFC Bank charges and what Axis Bank charges has again increased.
For example, HDFC Bank charges an interest of 8.2% on a one-year loan based on its ‘marginal cost of lending’ or MCLR system.
Before the latest hike, Axis was charging 8.3% for one year, and after the hike, it will charge 8.4%.
The difference can be seen in two-year terms also, but for three years, both banks charge the same 8.5%.
Unlike the hike seen in January, the latest increase in interest rates is not uniform. Only loans with tenures of 3 months and more have been touched.
Axis Bank’s one-month MCLR remains at 7.85%. The MCLR is calculated on a pre-disclosed formula and rates are reviewed on a monthly basis.
The hike is seen as a sign of pressure on the bank’s expenses, and way to deal with potential losses arising out of falling bond prices.