New Delhi: It's bad news for people who were planning to take a loan. Interest rates on loans—personal, corporate, advances to small sector industries and agriculture credit above Rs 2 lakh—are likely to shoot high.
Country's largest PSU banks, Punjab National Bank, Bank of India and Union Bank of India announced a hike of 50 basis points in the prime lending rates effective from Thursday.
Housing and car loans will not be impacted by this decision, even though some private banks are considering an interest rates hike on these loans as well.
"The bank may increase interest rates incrementally across all segments of customers including lending for automobile purchase. For housing loans, we are choosing not to increase rates for existing floating rate borrowers,” ICICI Bank’s Executive Director V Vaidyanathan said on Wednesday.
The banks announced interest rates hikes a day after RBI raised the cash reserve ratio by 50 basis points. The Reserve Bank of India took the step to check liquidity in order to curb high inflation rate. The move by RBI has resulted in pushing up cost of funds for banks, thereby an increase in the lending rates.
"Some banks could effect even a one per cent hike," Indian Banks' Association Chief Executive H N Sinor said.
Another PSU, Bank of Baroda is also planning raising its prime lending rates. The bank, however, might not touch housing loans immediately as raising these rates is last on its priority list.
UTI Bank CMD P J Nayak said the bank will adopt a wait and watch policy before taking any decision.
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