The bankers association of India (IBA) has opined that lending rates have to be hiked sooner or later. Fall in increase of deposits can be attributed as a cause for the former.
Indian Banks Association Deputy CEO, K Unnikrishnan said that despite the fact that strict liquidity situation has eased to quite a great degree, there has been a fall in the deposit growth in the segment.
The fall has been sharper post the recent policy rate increase by RBI.
Unnikrishnan added, “The rate of growth of deposits has been coming down by one to two per cent to around 17 per cent in recent weeks from 19 per cent this time last year”.
He also said that with many banks hiking deposit rates post the policy rate increase, there has been an increase in the banks’ cost of deposits. Hence lending rates have to be increased from the start of October.
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