Following the 25 basis points hike in the short-term repo rate, most banks have nudged up their loan rates by about 50 to 100 basis point.
This is being done without a change in the bank's prime lending rates.
Samir Bhatia, country head-corporate banking, HDFC Bank, said that the industry is now sanctioning new loans at 75 to 100 basis points higher than the prevailing rates in the market.
HDFC Bank asset liability committee that met on Tuesday decided to leave the deposit rates and prime lending rate unchanged for the time being, said an HDFC Bank official.
"We will wait and watch for the market to move," he added.
Its no more the buyers' market said a senior official from a private sector bank.
Post the mid-year Reserve Bank of India Annual Policy Statement, the sentiment has changed and banks are demanding 50 to 150 basis points higher interest rates on term loans even from AAA-rated corporates, he added.
Banks are also re-pricing their existing floating rate loans, he added.
R Asokkumar, president-credit, UTI Bank, said that the bank is now disbursing fresh advances at 25 to 50 basis points above the existing rates.
An IndusInd Bank official said the bank is now looking for higher pricing. Fresh loans sanctioned by the bank are priced at 50 basis points above the benchmark rates in the market, he added.
Most public sector banks are also seen re-pricing their term loan rates. Maharashtra State Electricity Board, Karnataka Power Corporation, Maharashtra State Road Transport Corporation, Gujarat Electricity Board are all in the market looking to tie up term loans of Rs 50 to 200 crore (Rs 500 million to Rs 2 billion).
Earlier these PSU customers used to demand 8.5 per cent for a five-year term loan. Now we are demanding 10 per cent interest. We may finally have to settle for 9 per cent but we are daring to ask for more, said a general manager in Bank of Baroda.
While the RBI has been clear in moving towards hardening of interest rates, drying up of liquidity is also prompting bankers to hike rates.
With liquidity drying up, clients have little choice. The best of the times are over for the AAA corporates said a senior official in a large PSU.
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