Mr. M V Nair, Chairman and Managing Director, Union Bank of India, said that the RBI is likely to increase key policy rates in the month of May due to continuing high inflation in the country. This increase in key policy rates will add pressure to the banks’ lending rates. He also said that the amount of increase in the policy rates is unpredictable and the RBI’s biggest concern is over the inflation.
He also said that the Reserve Bank of India has already hiked the policy rates eight times since March, 2010, in order to suck in liquidity and control inflation. The RBI’s next quarterly review will be on the 3rd of May 2011 and it is expected that there will be a mild hike on the cards.
Mr. M V Nair also stated that the hike in the policy rates will surely crash the current lending rates of the bank but they have decided not to go in for any premature hikes. He said that the bank has decided to wait till May 3 before deciding upon its lending rates. He added saying that the bank had increased its base rate by 50 basis points to 9.5 per cent and hiked deposit rates to the tune of 75 per cent after the apex bank went for an upward revision in policy rates during the last mid-quarterly review in March.
He said that the bank is expecting its core fee income from products like overdrafts and account service charges, would go up by 25% this fiscal. The bank has over a dozen retail loan products and has recorded remarkable service provisions for personal loan, home loan and so on.