Majority of the banks are unlikely to increase the lending rates immediately though another round of deposit rate hike is around the corner, following the RBI's latest rate hike.
According to bankers, since most of the banks had already increased their lending rates last month, there is no scope to raise them again in the current quarter. This is despite of the 25 basis point increase in repo and reverse repo rates announced by the RBI.
Banks react
“We can review base rates only once in a quarter. So banks that have already increased their base rate this quarter there will be no further revision this quarter. So regardless of the upward bias, the next revision will be only in January”, said Mr O.P. Bhatt, Chairman, State Bank of India.
SBI had increased its base rate by 10 basis points in October to 7.6 per cent. Those banks which have increased BPLR rates, will not do so again, he added.
Mr M.V. Nair, Chairman and Managing Director, Union Bank of India, said most of the banks had increased the base rate recently and further revision will depend on the previous quarter's average cost of funds.
To presume that because repo rates have been increased interest rates will be increased is incorrect. There will be an upward bias but there will be no knee jerk reaction. The consumers do not have to worry about an increase in interest rate tomorrow, said Mr Aditya Puri, Managing Director, HDFC Bank.
Deposit Rates on an upward bias
Bankers say that deposit rates will go up if credit picks up. “Deposit rate hike will come when there is a credit demand. If the demand for credit goes up which we think is happening, deposit rates would go up”, said Mr Bhatt.
IDBI Bank announced an increase in its deposit rates by 10-50 basis points across maturities with effect from November 4.
“Keeping in view the Policy Rate hike by the RBI, inflation and liquidity scenario, IDBI Bank has decided to increase the retail term deposit rates by 10 - 50 basis points in different maturity buckets,” the bank said in a statement. IDBI Bank also increased its BPLR by 25 bps to 13.5 per cent.
“Deposit growth has increased fortnight on fortnight, though it is still not at 18 per cent. There will be no immediate increase in deposit rates at least for the next two fortnights,” said Mr Nair.
Credit Growth still slow
According to bankers, it may be difficult to achieve 20 per cent credit growth this fiscal.
Mr Puri said that though there is credit growth, it is not as robust. “Investment demand will pick up but when it is not clear. It will happen after alternate sources of funding are exhausted,” he said.
Mr M.D. Mallya, Chairman and Managing Director of Bank of Baroda, said that though credit has not picked up much in the first half of the fiscal, it will pick up in the coming months.
“Going forward, there will be some increase in credit demand. But for the system whether 20 per cent is achievable for the system is debateable. The banking system may achieve a credit growth of 18-19 per cent,” he said.
+1.jpg)
0 comments
Post a Comment