Mumbai, Feb. 8
ICICI Bank plansto raise home loan rates by 50 basis points before the fiscal end. Interest rates on other retail loans such as auto are likely to be raised by 25-50 basis points, said Mr V. Vaidyanathan, Retail Head, ICICI Bank.
Mr Vaidyanathan said, "Liquidity is tight. So far we waited and watched. We wanted to see the impact on our cost of funds. Now there is no other way but to pass it on to customers."
He was speaking to presspersons on the sidelines of a seminar organised by the Indian Banks' Association.
The impact of the interest rate hike would be seen the most in home loans, as the pricing was wafer thin, he said. "Auto loans are sensitive to some extent, but credit cards and other personal loans would not be affected much," he said. While the current rate hike would not affect demand much, it could be a dampener if rates continued to rise, he said.
The Reserve Bank of India had raised the reverse repo and repo rates by 25 basis points in the mid-term review of the monetary policy, signalling a hardening of interest rates.
While many banks have raised deposit rates to compete with other small savings schemes, a corresponding hike in lending rates is yet to happen due to competitive reasons. There is pressure on deposit rates as well, Mr Vaidyanathan said. But as the bank hiked domestic deposit rates last month, it was not planning to raise them immediately.
Earlier this month, HDFC and LIC Housing Finance, raised interest rates by 50 basis points. IDBI Ltd also raised retail lending rates by 25 basis points.Related Stories:
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