Comments
Your home loan rates may go up by about 0.50 percentage points (or 50 basis points). That would mean that you'll pay about Rs 180 more every month on a Rs 10 lakh home loan contracted at 10 per cent.
Banks could soon increase their base rate and BPLR by at least 50 basis points following the hike in policy rates by the Reserve Bank of India.
These rates will go up because banks will now have to pay higher amounts on their savings bank deposits. Besides, with provisioning norms for non-performing assets also going up considerably, there will be an impact on costs which will be passed on, say bankers.
“Most banks had not passed on the extra cost to the borrower when rates were increased by 25 basis points during the last policy. So there is a strong possibility of banks transmitting their cost through hike in base rate and BPLR,” said Mr H.S. Upendra Kamath, Chairman and Managing Director, Vijaya Bank.
Base rate hike
Banks that Business Line spoke to indicated that the base rate would be hiked by about 50 basis points. Though bankers ruled out any severe impact on retail credit-offtake in the long-term, some of them admitted that this could be a little moderate in the immediate term. Retail borrowers could postpone their decision for a month at the most, “but ultimately things will get stabilised as most of them are first-time home buyers or vehicle buyers,” said Mr S. C. Sinha, Executive Director, Oriental Bank of Commerce.
This being a slack season for retail credit off-take, and “considering salary levels will also go up, I don't foresee much impact,” explained Mr M. Narendra, Chairman and Managing Director, Indian Overseas Bank. However, it could be the personal loan segment which could be hit more, as these rates could be tweaked much higher than other retail segments.
“Housing loans under the priority sector will now have to be treated differently. There is a need to differentiate rates between housing loans under retail credit and priority sector,” pointed out Mr Ramnath Pradeep, Chairman and Managing Director, Corporation Bank.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.