The Hindu Business Line : More banks hike lending, deposit rates

June 30 Owning your dream house has just got dearer and you can blame it on inflation. India’s leading housing finance company, HDFC and the largest private sector bank, ICICI bank, on Monday announced hike in interest rates on housing loans.

HDFC has increased its Retail Prime Lending Rate (on which its Adjustable Rate Home Loans are benchmarked) by 0.50 per cent with effect from July 1, 2008. The increase in RPLR will affect existing borrowers whose loans come up for re-pricing on or after July 1, 2008.

HDFC follows a three month reset cycle for its floating rate loans and hence the change in RLPR will impact the existing customers only over the next three month period.

HDFC said for new home loan customers, the ARHL will now be priced at a minimum of 11 per cent, while the fixed rates will be at 14 per cent. “This is in line with the rates of interest in the economy, which have hardened due to rising inflation and shrinking liquidity in the domestic market. Keeping in mind the concerns of our customers, we are affecting a moderate increase on all loan products,” HDFC said in a statement.

HDFC has also increased its rates on deposits by 0.50 per cent across most maturities.

ICICI Bank

India’s largest private sector bank, ICICI Bank, also announced an increase in interest rates on fixed deposits of value less than Rs. 15 lakh by 0.5 per cent to one per cent with effect from July 1, 2008.

ICICI Bank further announced an increase of 0.75 per cent in its Floating Reference Rate (FRR) for consumer loans, including home loans from June 30, 2008. The revised FRR will be 13.50 per cent against 12.75 per cent at present.

For existing floating rate customers, the increase in FRR by 0.75 per cent will be effective from July 1.“The existing fixed rate customers whose loans are fully disbursed will, however, not be impacted by the increase and their contracted rates will remain unchanged,” the bank said.

ICICI also announced an increase of 0.75 per cent in its Benchmark Advance Rate (I-BAR)—the revised I-BAR will be 16.50 per annum payable monthly, as against 15.75 per cent at present.

Bank of India

Bank of India has hiked its benchmark prime lending rates by 50 basis points to 13.25 per cent, from the existing 12.75 per cent, with immediate effect..

Vijaya Bank

Vijaya Bank has hiked its benchmark prime lending rate 25 basis to 13.25 basis points. Most banks had increased their BPLR by 50 basis points, following RBI’s hike in the cash reserve ratio and the Repurchase rate by 50 basis points each last week. The rate hikes would take effect from July 1, according to a Vijaya Bank release here.

Deposit rates up

Simultaneously, Vijaya bank pushed up deposit rates between 20 and 50 basis points for maturities of up to 2 years. Time deposits between 180 and 364 day would earn 8 per cent interest from July one, up from the current level of 7.50 per cent. Deposits between one and two years would earn 9 per cent instead of 8.8 per cent.

Vijaya Bank’s Chairman and Managing director, Mr. Prakash Mallya, said, “Our focus has been to moderate the impact of inflation on interest rates charged to the borrowers and at the same time, suitably reward the depositors.”

Allahabad Bank

Allahabad Bank has increased the Benchmark Prime Lending Rate by 50 basis points to 13.50 per cent with effect from July 1. The increase in BPLR has been necessitated in view of the increase in cash reserve ratio and overall economic scenario, said a press release from the bank.

The bank has also increased the interest rates on term deposits in various maturities. The interest rate on deposits for one-to-less than three years has been revised upwards at 9.50 per cent (earlier it was at 9 per cent for 550 days-to-less than two years). For senior citizens, the revised rate stands at 10 per cent for one-to-less than three years (9.50 per cent).

IOB

Indian Overseas Bank has raised its benchmark prime lending ratio “only by 25 basis points” on account of increase in cost of funds, the bank said. “However, existing housing loans which have been disbursed fully or partially are exempt from this interest rate hike,” the release says.The hike in BPLR rakes effect from July 1.

SBI upbeat

State Bank of India expects deposits and advances to grow 22 per cent this fiscal despite hardening interest rates in the economy, its Chairman, Mr O.P.Bhatt said here on Monday.

The country’s largest lender also said its home loans and auto loans would be dearer following its recent move to hike prime lending rate (PLR) by 50 basis points to 12.75 per cent, as the interest rates on these loans were linked to PLR. SBI had also recently announced hike in deposit rates by up to 75 basis points.

“There has not been too much of an impact on business growth. There is little reduction in home, auto and personal loans, but in corporates, infrastructure and services, there is no decline”, Mr Bhatt told reporters.

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