Major public sector lenders, notably State Bank of India, Punjab National Bank and Canara Bank, on Friday hiked their benchmark prime lending and deposit rates following the Reserve Bank's decision to tighten money supply further.

While, country's biggest lender SBI on Friday increased its fixed deposit rates by up to 75 basis points, a day after it raised its PLR by 50 basis points to 12.75 per cent, the second largest lender PNB also announced a hike in benchmark prime lending rate and deposit rates by up to 0.5 per cent.

With this increase the PNB's PLR would touch 13 per cent.The new rates would be applicable in respect of all existing and new accounts, wherever the interest rates are linked with BPLR.

The bank also increased interest rates on housing loans and auto loan by 50 basis points, the bank said in a statement.

PNB also raised deposit rates in between 25-50 basis points for various maturities in a bid to maintain its net interest margin.

The new rates would be effective from July 1. Following suit, Bangalore-based Canara Bank increased its BPLR by 0.5 per cent to 13.25 per cent.

However, the bank is yet to take a decision on hiking deposit rates.

During the day, SBI subsidiary State Bank of Bikaner and Jaipur and State Bank of Mysore also raised BPLR by 0.5 per cent each.

SBBJ PLR would go up to 13.5 per cent against the previous level of 13 per cent.

Despite the hike in deposit rates, the real earnings from the interest income is still in negative territory as inflation is hovering above 11 per cent.

A host of private sector lenders such as HDFC Bank, Jammu & Kashmir Bank and Yes Bank have already hiked their respective BPLRs in the range of 0.25 per cent to one per cent to protect margins.