Policy

Bankers say interest rates might not go up in the next few days

Satyanarayan Iyer Mumbai | Updated on March 12, 2018 Published on January 28, 2014

Your interest rates might not go up in the next few days even though the RBI hiked the key policy rates by 25 basis points on Tuesday.

Bankers said that the tone of the policy, which says that it will not increase the rates until the next policy on April 1, has brought some relief.

Banks will have to assess their cost of funds before taking a call on hiking interest rates. Most banks felt that, at this point, it will not be necessary to hike the interest rates.

Deposit rates might also not increase as banks will look to maintain their margins.

Arundhati Bhattacharya, Chairperson, State Bank of India, said: “There is no clear one-to-one relation between repo rate and lending rate (at a commercial level).”

Banks are allowed to borrow only limited funds from the RBI under the repo window.

A policy rate hike was widely expected in mid-December but the RBI surprised at that time with a status-quo and now the RBI hiked the rates when it was expected to hold. So, net-net the policy will have minimal impact on lending or deposit rates.

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Published on January 28, 2014
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