Old private banks factor in hike ahead of RBI announcement

Old private banks such as Catholic Syrian Bank, Tamilnad Mercantile Bank and City Union Bank seem to have hiked their base rate recently. So, a hike in the rate post the RBI's announcement of a hike in the repo rate today, did not leave the chiefs of these banks speechless, nor made them say ‘we will take cue from the bigger players in the industry,' as they did in the past.

The Managing Director and Chief Executive of Tamilnad Mercantile Bank, Mr A.K. Jagannathan, said that the bank increased its base rate by 25 basis points only a fortnight ago from 10.5 to 10.75 per cent. “Having increased the rate just ahead of the RBI's review of the policy, we will not be jacking up the rates further now. We will wait and see,” he said.

Mr V.P. Iswardas, Managing Director of Catholic Syrian Bank, maintained that the base rate at CSB was increased to 10.25 per cent only about a month ago. “We have already factored this hike. A further hike, therefore, may not be immediate,” he said.

Reacting to the RBI's 25 basis point hike in interest rate, Lakshmi Vilas Bank's Chief Executive, Mr P.R. Somasundaram, said ‘I am illogically optimistic about the future, as everything seems loaded to one side,' referring to the interest rate hike, rising inflation and the recent increase in petrol price. ‘Perhaps it's the Indian way of looking at things', he added. Asked if LVB would increase its lending rate, he said ‘we will maintain the status quo and not pass on the increase; we have sufficiently factored this.' The bank's base rate stands at 10.90 per cent. (This is marginally higher than the other old private banks, whose rates range between 10.25 and 10.75 per cent). On credit off take, he said ‘it is subdued. But there is an undercurrent of optimism as everyone believes that this is the peak,' adding ‘there is this lag effect though, but the economy still appears brisk. I am optimistic about the second half'.

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