The Hindu Business Line : ICICI Bank raises auto loan rate by 100 bps

This is the second time in two months that ICICI Bank is raising deposit rates. The bank had earlier increased deposit rates in February. It had raised auto loans in November 2005 by about 50 basis points.

The bank has also discontinued the discounts on home loans to meet the rising cost of funds, which has pushed up home loan rates in some cases.

ICICI Bank had also increased home loan rates and its Benchmark Prime Lending rate by 50 basis points last month.

ICICI Bank is a market leader in retail loans, with home loans comprising 50 per cent and auto loans forming about 40 per cent of the retail portfolio.

The largest bank in the country, State Bank of India, had hiked the interest rates on home loans by 25-75 basis points in February.

HDFC Bank, the other large player in the auto loan segment, had hiked rates by around 50 basis points over a month ago, said a senior official from the bank. The bank would take a call on interest rates within a day or two.

"There is pressure on loan rates in the system as a whole, given the fact that deposit rates are rising," he said.

The Reserve Bank of India had increased reverse repo and repo rates by 25 basis points in its mid-term review of the monetary policy in January, signalling a hardening of interest rates.

Following this, most banks have raised their deposit rates.

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