In the monetary policy review of Reserve Bank of India, it was decided to hike the policy rates. The repo rate went up by 25 basis points while reverse repo rate has gone up by 50 basis points.
The bankers say that the first impact of the rate increase would be on fixed deposit rates which may increase by more or less the same degree.
But experts say that home, car and personal loan rates are not expected to increase till September mid quarter review.
Renu Sud Karnad, MD of HDFC Ltd, said that if policy rates are increased further, then the loan rates would also go up. Karnad said, “But one more round of policy rate hikes by the RBI could see lenders increase their interest rates”.
SBI chairman O P Bhatt stated, “Every bank is going to absorb what has happened today”.
KVS Manian, group head (consumer banking), Kotak Mahindra Bank said, “Yes (deposit rates) are headed upwards. The RBI has indicated it will make sure the liquidity remains just adequate – that would put upward pressure on rates”.
Pujit Agarwal, MD, Orbit Corporation, said demand is very strong in the residential sector. He said, “Pricing is a factor of demand and supply. Places where there is excess supply, some adjustments will take place. The RBI is keeping a hawkish eye. With further interest rate hike, real estate prices will not go up for some time at least, and if prices go up after this, then absorption will drop sharply.”