RBI hikes repo rate by 25 bps: Experts believe banks to raise rates

Make small pre-payments to reduce interest outgo on loans; depositors may not gain much if inflation rate stays high

It’s time for depositors to cheer, while borrowers will feel the pinch a little more. With the Reserve Bank of India (RBI) raising the repo rate by 25 basis points (bps) on Wednesday, the first time in four years, banks are expected to follow. The signals have already been there for the past few months.  

Since March, banks have been raising their deposit and lending rates slowly but steadily. Last Friday, State Bank of India (SBI), ICICI Bank, Kotak Mahindra Bank, Punjab National Bank and home loan behemoth Housing Development Finance Corporation raised lending rates. “Over the past 45-60