HDFC Bank & UTI Bank may raise deposit rates & rates on loans by 25-50bps. | |
| Private and foreign banks are set to hike both lending and deposit rates soon. |
| |
| However, public sector banks are adopting a wait and watch approach as finance minister P Chidambaram has insisted that lending rates will not go up following the hike in the reverse repo rate. Interest rates on all retail loans, including housing loans, will go up. |
| |
| HDFC Bank and UTI Bank are likely to raise their interest rates by 25-50 basis points, both on the lending and the deposit sides. The asset liability committees of Union Bank and Bank of India are slated to meet next week to review the situation. |
| |
| The lending rate hike can take place even without raising the prime lending rate (PLR). In other words, banks will decrease the spread for sub-PLR loans. The PLR is the rate at which prime bank customers can borrow money. But all large borrowers with good credentials borrow at rates below the PLR. |
| |
| Said a senior HDFC Bank official, "We are likely to increase both deposit rates and rates on retail loans as well as on corporate loans by 25-50 basis points." HDFC Bank's asset-liability committee will meet next week to take a decision on interest rates. |
| |
| "The rise in the reverse repo rate will lead to a rise in the cost of funds of banks, leading to a rise in loan rates for both the retail and corporate side," said a senior UTI Bank executive. This will include rates on home loans, car loans and personal loans. |
| |
| Although ICICI Bank CEO and Managing Director KV Kamath said he saw no upward pressure on interest rates, an executive of the bank said, "There is concern on existing interest rates. We will have to examine the impact of the rise in the reverse repo rate on the cost of funds of the bank." |
| |
| Anil Khandelwal, chairman and managing director of Bank of Baroda, said, "It is too early to look at deposit and lending rates." Looking ahead, he said, "It is a dynamic situation." |
| |
| However, the head of another state-owned bank said on condition of anonymity, "Every government will want soft interest rates to continue. But now the signal is clear and a hike in deposit and lending rates is inescapable. Banks are scheduling asset-liability committee meetings in the coming week." |
| |
| "Public sector banks may not hike rates immediately but interest rates will definitely go up in another couple of months. We may even consider hiking the PLR," said a senior banker. |
| |
| A senior official at Bank of India said: "We are not immediately hiking our lending and deposit rates. We will wait and watch for a few weeks. It all depends on how the money markets behave in the coming weeks." Bank action
- HDFC Bank says it may increase both deposit rates and rates on retail loans as well as on corporate loans by 25-50 basis points
- ICICI Bank will examine the impact of the rise in the reverse repo rate on the cost of funds. Chief KV Kamath says no upward pressure on interest rates
- UTI Bank may raise rates by 25-50 basis points. It says the rise in the reverse repo rate will lead to a rise in rates for both retail and corporate loans
|
|
| |
