Mumbai: Bankers on Friday said that corporate, home and auto loans are expected to be dearer marginally following 25 basis points hike in key short-term lending and borrowing rates by RBI.
"We need to wait and see the credit offtake and systemic liquidity to assess the medium term impact on lending and borrowing rates," said ICICI Bank MD and CEO Chanda Kochhar.
"There would be marginal impact on interest rates," said Yes Bank MD Rana Kapoor.
In a bid to contain inflationary expectations, RBI on Friday raised its key short-term lending and borrowing rates by 25 basis points.
The repo and reverse repo rate (short-term rates at which RBI lends and borrows from banks) were hiked to 5 per cent and 3.5 per cent respectively and could make banks commercial lending dearer.
"A rate hike was expected to anchor inflationary expectations and so the hike by itself is not surprising- however the timing is a bit of a surprise as most expected it to happen in April," said HDFC Bank Head-Treasury Ashish Parthasarathy.
He, however, did not expect an immediate rise in interest rates.
According to UCO Bank Chairman and Managing Director S K Goel, there could be a hike in lending rates in the industry but the situation had to be assessed over the next two weeks.
"The (RBI) action was expected in the face of rising inflation. This will have a substantial impact on the liquidity in the system and will result in a rise in interest rates. But we have to wait and watch for one or two weeks before taking the final call," Goel said.
Banking major SBI hinted at hiking its lending rates in near future but ruled out doing so in this fiscal.
"The signal from the Reserve Bank is that money is going to be costlier," SBI Chief Financial Officer S S Ranjan said.
Ranjan, however, hinted that the bank is unlikely to increase its lending rates at least in the remaining part of this fiscal and would evaluate market conditions prior to taking any decision.
Indian Overseas Bank CMD S A Bhat said that it is on expected line and it is a step in the right direction. "I would be surprised if RBI raise key rates by 25 basis points
in its April policy."
According to Bank of Baroda Executive Director R K Bakshi this is a signal that era of soft interest rates is over. "I don't think there would be BPLR (Benchmark Prime Lending Rate) action," Bakshi said, adding, banks would wait for another couple of months before raising lending rates.
Standard Chartered's Country Head Neeraj Swaroop described the rate hike as primarily a signal. The move will definitely help the RBI's efforts to arrest inflation.
The apex bank has signalled a tighter monetary regime as well as its intention to combat inflation."
Several banks, including major players like ICICI Bank, HDFC Bank and Bank of India, have already raised deposit rates which will increase the cost of funds.
The country's largest realty player DLF said the move by the central bank will have an adverse impact on the sector.
"After this, liquidity will be squeezed and prices of properties are going to increase, which will affect demand. The only way to control the prices is to increase supply and
government should look into this aspect as well," DLF Group Executive Director Rajeev Talwar said.
"The hike in policy rates was expected. However, there is enough liquidity in the system right now. I don't know whether it will necessarily result in hike in interest rates," said Society of Indian Automobile Manufacturers President Pawan Goenka.
He, however, said that if lending rates increase, it will be a triple-whammy for the sector as auto companies have already hiked the prices of their products following the two
per cent increase in excise duty in the Budget and one more price hike is on the offing in April for switching over to higher emission norms.
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