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Will your bank hike lending rates?
“Depends on RBI’s monetary policy stance on May 3”. That was the stock answer of most bankers to Moneycontrol.com’s query on whether they would follow State Bank of India.
SBI, the country’s largest lender on Tuesday hiked lending rates by 25 basis points. But other banks said they would wait for the Reserve Bank’s decision on policy rates, before hiking their rates. Bankers widely expect RBI to hike key policy rates (repo and reverse repo) by 25 basis points.
Repo is at the rate at which the RBI lends to banks, and reverse repo is the rate at which it borrows money from banks.
“We expect a 25 basis point hike in benchmark rates,” said M Narendra, CMD, Indian Overseas Bank. “If that happens, we will review our lending rates after considering factors like demand for funds and the impact on short and long term borrowing rates. SBI’s hike in lending rates is more of a correction as its rates were mostly lower than other banks,” he said.
After the latest hike, SBI’s current base rate is at 8.50% while benchmark prime lending rate (BPLR) is at 13.25%. Base rate is the minimum rate below which banks are not permitted to lend. RBI had introduced it to replace BPLR system in mid 2010 to increase credit flow to small borrowers at a reasonable rate.
Lenders like Bank of Baroda, IndusInd bank and Kotak Mahindra bank too are considering a hike in lending rates. Their respective asset liability committees (ALCO) are expected to decide shortly.
J Moses Harding, head – gloal markets group, IndusInd Bank, said lending rates could be revised before the RBI policy.
“We revise our lending rates based on demand and supply situations and to stay competitive in the market. Banks have already entered into slack season wherein demand for loans may fall,” Harding told Moneycontrol.com
Says K V S Manian, group head – consumer banking, Kotak Mahindra Bank, “We will take call on hiking lending rates only after RBI policy review meeting. We expect at least 25 bps hike in interest rates.”
“Depends on RBI’s monetary policy stance on May 3”. That was the stock answer of most bankers to Moneycontrol.com’s query on whether they would follow State Bank of India.
SBI, the country’s largest lender on Tuesday hiked lending rates by 25 basis points. But other banks said they would wait for the Reserve Bank’s decision on policy rates, before hiking their rates. Bankers widely expect RBI to hike key policy rates (repo and reverse repo) by 25 basis points.
Repo is at the rate at which the RBI lends to banks, and reverse repo is the rate at which it borrows money from banks.
“We expect a 25 basis point hike in benchmark rates,” said M Narendra, CMD, Indian Overseas Bank. “If that happens, we will review our lending rates after considering factors like demand for funds and the impact on short and long term borrowing rates. SBI’s hike in lending rates is more of a correction as its rates were mostly lower than other banks,” he said.
After the latest hike, SBI’s current base rate is at 8.50% while benchmark prime lending rate (BPLR) is at 13.25%. Base rate is the minimum rate below which banks are not permitted to lend. RBI had introduced it to replace BPLR system in mid 2010 to increase credit flow to small borrowers at a reasonable rate.
Lenders like Bank of Baroda, IndusInd bank and Kotak Mahindra bank too are considering a hike in lending rates. Their respective asset liability committees (ALCO) are expected to decide shortly.
J Moses Harding, head – gloal markets group, IndusInd Bank, said lending rates could be revised before the RBI policy.
“We revise our lending rates based on demand and supply situations and to stay competitive in the market. Banks have already entered into slack season wherein demand for loans may fall,” Harding told Moneycontrol.com
Says K V S Manian, group head – consumer banking, Kotak Mahindra Bank, “We will take call on hiking lending rates only after RBI policy review meeting. We expect at least 25 bps hike in interest rates.”
Bank | BPLR | Base rate |
| HDFC Bank | 17.25% | 8.70% |
| Punjab National Bank | 13.00% | 9.50% |
| Bank of Baroda | 13.75% | 9.50% |
| ICICI Bank | 17.50% | 8.75% |
| State Bank of India | 13.25% | 8.50% |
| Kotak Mahindra Bank | 17.50% | 8.75% |
| Indian Overseas Bank | 13.75% | 9.5% |
| IndusInd Bank | 12.50% | 8.25% |
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