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Business News/ Home-page / FM, bankers say hike in lending rates unlikely
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FM, bankers say hike in lending rates unlikely

FM, bankers say hike in lending rates unlikely

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New Delhi: Borrowers of housing and auto loans can heave a sigh of relief as the government and leading bankers have said that lending rates are likely to remain stable despite Reserve Bank’s tightening the money supply.

“They (PSU bankers) are happy that only the Cash Reserve Ratio has been hiked and policy rates have been untouched. They do not expect the CRR hike to impact interest rates. So going forward, in the reasonable future, I do not expect an increase in interest rates by public sector banks," Finance Minister P Chidambaram told reporters on thursday after meeting PSU bank heads.

Leading bankers on their part said that interest rates are likely to remain as they are in near future.

SBI Chairman O P Bhatt said, “I do not see them (interest rates) rising in the near future." Rates are likely to remain flat in the near term, he said.

When asked about the interest rate outlook, ICICI Bank CEO and MD K V Kamath said, “Let markets decide. I do not know how interest rates are going to behave in the next 7-10 days."

Punjab National Bank CMD K C Chakrabarty said at present there is no plan to increase interest rates. “Rates are likely to be stable in the near-term," he said.

According to Allahabad Bank CMD A C Mahajan, the bank will not increase interest rates in the near future.“ However, if there is another CRR hike, then the bank will take a view, he added.

The bankers’ comments ease the concerns that banks may increase the lending rates after RBI hiked the CRR to 8.25 per cent in three tranches, which would drain the system by nearly 27,000 crore.

CRR is the proportion of deposits with banks that is kept with the apex bank at all times.

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Published: 01 May 2008, 08:30 PM IST
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