The common man who has been reeling under the increasing inflation has now more to worry as the Reserve Bank of India (RBI) on Tuesday hiked the short-term lending rates to banks by 0.25 per cent or 25 bps to 7.75 per cent. The move may have adverse impact on consumers as it is set to make home and auto loans more expensive.
While most banks refrained from making explicit comments on the likely effect on lending rates, State Bank of India Chairperson Arundhati Bhattacharya said, “Yes, some rate changes will be expected.” She declined to disclose details. However, Oriental Bank of Commerce’s Chairman and Managing Director Sl Bansal ruled out raising any interest rates saying that the bank does not wish to hurt the consumer sentiment. He said, “No, we will not increase the rates, neither of home loans nor of automobile loans. We will maintain status quo.”
Commenting on ICICI Bank plans regarding lending rates, its Managing Director & CEO Chanda Kochhar said, “I think one should wait for some time and then see what exactly are the effects on the cost of funds and then only take a call.” She added that there were other factors like seasonal liquidity constraints due to a pick-up in credit demand.
HDFC Bank’s Managing Director Aditya Puri hinted that if the deposit rates were to go up, the lending rates will also follow suit.KR Kamath, Chairman & Managing Director of Punjab National Bank, added that this should not be seen as any hint of upping the deposit rates. Malay Mukherjee, Executive Director of Central Bank of India, said that the bank is still assessing the situation. He added, “We have our asset liability committee (AlCO) meeting tomorrow in which we would take the decision.”
While the banks are yet to decide whether or not to hike lending rates, real estate developers are voicing their concern on the rate hike by the central bank. Aman Agarwal, Director, KV Developers, said, “This 25 bps hike by RBI is not a good sign for the real estate industry. It will encourage banks to increase their interest rates which will be an extra burden to the buyers who are planning to buy properties this festive season.”
Delhi-based real estate developer, Assotech Realty’s Managing Director Neeraj Gulati said, “At the outset of this festive season which brings a new set of inspirations and hope, we as developers have mixed feelings.” Sunil Mantri, Chairman & Managing Director of Mantri Realty, said that the move might have an adverse impact on the real estate sector as the sales might fall during the festival season. He said, “The increase in repo rate by 25 basis point will impact the already sluggish real estate market adversely.”