On the heels of HDFC's raising lending rates, ICICI Bank on Saturday decided to hike deposit and lending rates by up to 50 basis points from December 6.
The ICICI move comes a day after RBI Governor D Subbarao asked banks to hike deposit rates and lower lending rates, with a view to raising the level of national savings, as well as to encourage investments required for double-digit growth.
ICICI Bank has decided to raise interest rates on fixed deposits of various tenors by 0.25-0.50 per cent.
However, contrary to RBI's suggestion that banks should lower lending rates, ICICI has decided to increase benchmark prime-lending rate and its Floating Reference Rate (FRR) for consumer loans (including home loans) by 50 basis points.
The benchmark rates are used for determining interest rates on loans and advances sanctioned up to June 30, 2010.
The customers who have borrowed at fixed rates will not be impacted by the above increase and their contracted rates will remain unchanged.
With effect from July 1, 2010, interest rate on new loans and advances including consumer loans is determined with reference to ICICI Bank Base Rate. The base rate is currently at 7.75 per cent.
It is to be noted that many banks including Punjab National Bank, Allahabad Bank, Syndicate Bank raised deposit rates recently to tide over tight liquidity situation.
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