Union Bank to increase lending rates

The Union Bank today said it is expecting lending rates to go up by 50 basis points (0.5 per cent) shortly.

“By the month end, we will take a review of the whole situation and accordingly we will raise our lending rates,” Union Bank Chairman and Managing Director M V Nair told Business Standard here. “We are expecting lending rates to go up by 50 basis points, he said.

Nair, however, asserted the fundamentals of the entire Indian banking sector were very strong and robust. But he expressed concern over the liquidity crunch being faced by the banks and said the inflation was beyond the level of comfort zone in the country.

Elaborating further, he said since the deposit rates have gone up, the funding cost also inch up. As a follow up action, the lending rates also go up, he said. “The trend for the interest rates is to move up further.” Nevertheless, he expressed hope the liquidity crunch would ease shortly owing to steps taken by Reserve Bank of India.