Money & Banking

Rate hike on expected lines, say bankers

Anjana Chandramouly A.J. Vinayak Bangalore | Updated on June 27, 2012

The RBI’s repo rate hike is on expected lines, which will be transmitted to borrowers sooner or later.

However, some bankers feel that with inflation not getting moderated at all, the central bank might be coming out with few more rate hikes in the future.

“The credit policy is in line with the increasing inflation level, which is almost touching double-digit figures. And given the kind of trend, where inflation is not getting moderated at all, we might see a few more rate hikes by the RBI,” Mr H.S. Upendra Kamath, Chairman and Managing Director, Vijaya Bank, told Business Line.

And the RBI wants banks to transmit the rate hike to borrowers. So, banks will have to do so, despite a credit slowdown, “which is more or less acknowledged”, he pointed out. Vijaya Bank’s Asset-Liability Committee would take a call on the rate hike transmission, he added.

Not to raise rates immediately: Canara Bank

Though lending rates are expected to go up again, public sector Canara Bank will not transmit the burden to borrowers immediately.

"It all depends on how deposit rates play out. If they harden, transmission will be immediate. But if there is no upward pressure on deposit rates, then it will take some more time for transmission to happen," Mr S. Raman, Chairman and Managing Director, Canara Bank, told Business Line.

May be, it won't happen faster, he said. He did not expect much impact due to a repo rate hike of 0.25 basis points. In the past 15 months, rates have gone up 3-4 per cent, and it is the cumulative impact which is more. "Rate hike transmission will happen again, but this time around, the wait-and-watch period is slightly longer," said Mr Raman.

Published on September 16, 2011

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