Personal, RE, consumer loans may cost more
Bankers said there will be no impact on home and auto loans due to hike in repo rate.
By PTI |
NEW DELHI: Bankers on Monday said there will be no impact on home and auto loans due to the 0.25 per cent hike in one of the key short-term rates by RBI, but lenders having liquidity problems may hike loan rates for personal, real estate, consumer goods and equity market.
In the Monetary Policy Review, RBI raised the Repo, the rate at which it lends to banks, by 0.25 per cent to 7.25 per cent while keeping reverse repo, the rate at which it borrows from banks unchanged at 6 per cent.
"Banks having liquidity problem may charge a higher price for personal loans, real estate, equity market, consumer goods loans," Oriental Bank of Commerce Executive Director Allen C A Pereira told PTI.
Welcoming RBI's policy stance, he said repo rate hike signals that productive sectors should get sufficient credit while non-productive sectors should pay a little more.
Those banks having less liquidity will have two options before them, to mobilise resources from public through deposits or borrow from Reserve Bank.
Many weaker banks borrow from RBI as it is not easy to mobilise adequate funds from public due to competition with bigger banks and the hike will increase their fund cost.
Punjab National Bank Executive Director K Raghuraman said RBI's repo rate hike is a caution about credit growth, especially for banks that are aggressive toward market.
"Those banks borrowing from RBI to meet liquidity demand may jack up interest rates," Raghuraman said.
Both PNB and OBC said they see stable interest rate scenario and may not raise lending rates as they are comfortably placed liquidity wise.
PNB Chairman and Managing Director S C Gupta said the bank would not immediately hike interest rates.
While welcoming the policy statement, he said there was some movement towards full capital account convertibility. He also welcomed RBI's decision to give banks greater headway in raising resources overseas, especially in Tier-I where the limit has been increased from 25 per cent to 50 per cent.
M Balachandran, Chairman and Managing Director of Bank of India, said deposit accretion would become a major source of raising resources for banks.
He dispelled any fears of a slowdown in credit but said banks must ensure that credit is channeled towards productive segments like manufacturing. He also felt there may not be any immediate upward bias on inflation.
Chairperson of Central Bank of India H N Daruwala described the policy as a prudentially protective one and said it supports the push toward fuller CAC.
She said the economy was robust and inflation has gone up only because of floods in certain parts of the country as a result of which food grain production was affected.
"If at all inflation goes up, it will only be in the fourth quarter," she said.
Bank of Baroda CMD Anil Khandelwal expressed similar views and maintained there would not be any immediate impact on interest rates on home loans.
"This will be our last resort and even if we do it, we will do it with reluctance," he said.
Khandelwal said banks would have to undertake liquidity management as borrowing from RBI would be costlier. There would be no immediate re-pricing of loans by Bank of Baroda, he added.
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