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ICICI Bank personal loans may turn costlier

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Mr K.V. Kamath, Managing Director and Chief Executive Officer.
Mr K.V. Kamath, Managing Director and Chief Executive Officer.

Our Bureau

Mumbai, June 17

THE hike in home loan interest rates by ICICI Bank is a lag correction and was done to protect interest margins, said Mr K.V. Kamath, Managing Director and Chief Executive Officer.

On Thursday, ICICI Bank increased its lending rates for home loans by half-a-percentage point. ICICI Bank's minimum floating rate for home loans is now 8 per cent and fixed rate is 9 per cent.

Though he said this was not a signal of an overall hike in consumer loan rates, Mr Kamath did not rule out a hike in other personal loans. He was speaking on the sidelines of a seminar on risk management organised by the Institute of Internal Auditors and Ernst & Young.

"The action taken is based on what has happened so far. Over the last one-year deposit rates have increased by 50 basis points, across the spectrum. Now banks are cautious," Mr Kamath said. In the near future rates are likely to remain stable, he added.

About rise in other retail loans such as personal and auto loans, Mr Kamath said it would depend on the maturity and character of the loan.

The economic prospects of the country seem to be good, with Rs 2,50,000 crore worth projects waiting in the pipeline. However, these projects may not necessarily access the banking system for funds. Most big corporates would have cash balances to fund their projects, due to which there would be no strain on liquidity.

"The roles for banks are shifting to loan syndication and transaction business," Mr Kamath said.

(This article was published in the Business Line print edition dated June 18, 2005)
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