Soon after the announcement of RBI increasing the CRR by 75-basis points, many CEOs of commercial banks indicated that the banks were unlikely to raise their Prime Lending Rates or deposit rates at least till the end of March. Car loan rates are also unlikely to rise due to increased competition among banks in this segment.
Mr. A.C. Mahajan, CMD of Canara Bank said that rates would not rise in the near term due to ample liquidity in the system. Mr. D.L. Rawal, CMD of Dena Bank opined that rates however would firm up only after March if credit disbursal revived.
“The hike in CRR has to be adjusted and the impact will have to be passed on to customers. Hence, the sub-PLR advances would be impacted and reduce over a period of time,” said MV Nair, CMD of Union Bank of India and chairman of the Indian Banks’ Association.
According to TY Prabhu, CMD of Oriental Bank of Commerce, short-term rates for corporates may go up but again this will depend on the surplus liquidity that each bank has with them. Large banks have surplus liquidity in the region of Rs 8,000-10,000 crore.
“With CRR hike, banks will lend more to corporates instead of parking funds with mutual funds. The hike will have little impact on margins but then loan growth will make up for it,” said IndusInd Bank MD & CEO Romesh Sobti.
Dhanlaxmi Bank MD & CEO Amitabh Chaturvedi said: “There may not be a hike in loans and deposit rates. Margins are unlikely to be hit as there is enough money in the system.”
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