A recent press report said that the recent hike in key interest rates by the Reserve Bank of India might make the bankers increase their interest rates on the retail loans and corporate credit including home loans and auto loans.
According to Mr. S. C. Sinha, Executive Director of Oriental Bank of Commerce, the banks would increase their lending and deposit rates by at least 25 basis points with regard to the hike in the key interest rates by the RBI. The banks have not changed their interest rates after the September review of monetary policy but now the banks would make adjustments in order to cope up with the increase in cost of funds.
The RBI has increased the key rates by 25 basis points such that the repo rate went up to 8.50 per cent and reverse repo rate has gone up to 7.50 per cent. The Central bank has increased the key rates for five times this fiscal and in the last one and a half month it has increased the rates by 50 basis points.
In his statement Mr. R.K. Bansal, Executive Director of IDBI Bank said that the increase in the cost of funds would go up for the banks and a little of this increase would be transferred on to the customers and this raise in interest rates would be from 25 to 50 basis points depending upon the liquidity positions of the banks.