Bankers on Tuesday said there will be no impact on home and auto loans due to the 0.25 per cent hike in one of the key short-term rates by the Reserve Bank of India, but lenders having liquidity problems may hike loan rates for personal, real estate, consumer goods and equity market.
In the Monetary Policy Review on Tuesday, RBI raised the repo, the rate at which it lends to banks, by 0.25 per cent to 7.25 per cent while keeping reverse repo, the rate at which it borrows from banks unchanged at 6 per cent.
"Banks having liquidity problem may charge a higher price for personal loans, real estate, equity market, consumer goods loans," Oriental Bank of Commerce Executive Director Allen C A Pereira told PTI.
Welcoming RBI's policy stance, he said repo rate hike signals that productive sectors should get sufficient credit, while non-productive sectors should pay a little more.
Those banks having less liquidity will have two options before them, to mobilise resources from public through deposits or borrow from the Reserve Bank.
Many weaker banks borrow from RBI as it is not easy to mobilise adequate funds from public due to competition with bigger banks and the hike will increase their fund cost.
Punjab National Bank Executive Director K Raghuraman said RBI's repo rate hike is a caution about credit growth, specially for banks who are aggressive toward market.
"Those banks borrowing from RBI to meet liquidity demand may jack up interest rates," Raghuraman said.
Both PNB and OBC said they see stable interest rate scenario and may not raise lending rates as they are comfortably placed liquidity wise.
SBI welcomes the review: State Bank of India said on Tuesday the central bank's mid-term credit policy review would help keep interest rates stable, which in turn would benefit the crucial infrastructure sector.
"We are very happy with the fact that interest rates will remain stable for some time, which will enable the infrastructure sector to take off," SBI Managing Director T S Bhattacharya told PTI in Mumbai.
He was responding to a query whether the RBI's decision to keep reverse repo rate unchanged and increasing repo rate by 25 basis points would impact interest rates.
Bhattacharya hailed the RBI's move to increase the External Commercial Borrowings limit by $250 million. This would help the infrastrucuture sector, particularly Ultra Mega Power Projects, which requires massive investments, he said.