ICICI Bank won't hike rates on existing home loans. | |
| ICICI Bank, the country's largest retail lender, has decided to hold interest rates charged to existing home loan borrowers, while three government-owned banks "" Punjab National Bank (PNB), Bank of Baroda (BoB) and Bank of India (BoI) "" hiked their interest rates across the board with effect from tomorrow. |
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| PNB, BoB and BoI have all raised their benchmark prime lending rates (PLR) by 50 basis points each. One basis point is one hundredth of one per cent. PNB's prime lending rate now is 12.25 per cent and BoI's 12.50 per cent. |
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| PNB had increased its PLR in early last month by 25 basis points and BoI by 50 basis points. BoB's PLR has increased to 12.50 per cent. |
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| The increase in prime lending rates follow a 50 basis points hike in the cash reserve ratio (CRR) by the Reserve Bank of India (RBI), effective in equal phases from February 17 and March 3, which would suck out Rs 14,000 crore from the system. |
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| Banks are raising lending rates to make up for the increase in cost of funds, loss on account of zero-interest CRR balances and depreciation in marked-to-market investments as yields harden. |
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| ICICI Bank's executive director V Vaidyanathan, said, "The bank may increase interest rates incrementally across all segments of customers, including lending for automobile purchase. |
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| For housing loans, we are choosing not to increase rates for existing floating rate borrowers." |
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| ICICI Bank will not increase its benchmark rates for consumer and corporate loans, but would charge higher rates to new customers over and above the 100 basis points increase effective February 9. |
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| Several public sector banks are also considering charging much higher interest on home loans of above Rs 15 lakh. |
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| Most public sector banks are also considering raising their deposit rates. |
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| Vaidyanathan said "Whatever increase on the liabilities side will be passed on to the assets side." |
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| He said the credit growth is expected to slow down to around 20 per cent with another round of increase in lending rates. |
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