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Housing finance major HDFC today set off a fresh round of rate hikes by raising lending rates for both new and existing customers. HDFC increased its retail prime lending rate (RPLR), on which its adjustable rate home loans (ARHL) are benchmarked, to 15.25 per cent from 15 per cent.
The interest rate hikes follow the Reserve Bank of India move upping key short-term rates by 25 basis points in the monetary policy late last month, in an attempt to curb inflationary pressures. Now, retail and corporate loans are set to become dearer even as depositors stand to earn higher returns on their fixed deposits with banks announcing rate hikes. Most lenders have hiked deposit and lending rates by 25-50 basis points.
On Tuesday, Indian Overseas Bank, Indian Bank and Dena Bank were among those that increased the lending rates. Bank of India and Oriental Bank of Commerce hiked both lending and deposit rates, while Bank of Baroda hiked only deposit rates. HDFC Bank may also look at increasing its auto loans shortly, said a senior bank official.
New home loan rates
The revised adjustable rate home loans ARHL for new home loans up to Rs 30 lakh is 9.75 per cent (9.5 per cent); for loans between Rs 30 and Rs 75 lakh, 10 per cent (9.75 per cent); and for loans above Rs 75 lakh, 10.25 per cent (10 per cent).
“There has been an upward bias in rates for a very long time and it has translated into increases in lending and deposit rates. The actual transmission between the policy rates hikes and action by banks would depend on the liquidity curve of each bank and its asset-liability situation,” said Mr O P Bhatt, Chairman, State Bank of India recently.
Ms Chanda Kochhar, MD and CEO, ICICI Bank, had said that as the cost of deposits has been moving up, there is clearly an upward bias in interest rates. An ICICI spokesperson today said there was no immediate plan to hike interest rates.
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