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ING Vysya likely to up base, other lending rates

ING Vysya likely to up base, other lending rates
PTI
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First Published: Wed, Dec 22 2010. 04 09 PM IST
Updated: Wed, Dec 22 2010. 04 09 PM IST
Mumbai: South-based ING Vysya, on Wednesday said it is likely to upwardly revise its base rate and other lending rates next quarter on the back of pressure from deposit rates which have been moving up.
“If the deposit rates have been hiked 50 basis points, lending rates have to be increased by more than 50 basis points and if you feel the deposit rates have moved up by 100 basis points, it (lending rate hike) should be more than 100 basis points,” the bank’s managing director and chief executive, Shailendra Bhandari, told reporters here.
Without giving any figure or exact timeline, Bhandari said the ALCO (asset liability) committee of the bank will be meeting to take a call on it. The bank’s current base rate is a very competitive 7.75%.
The base rate system was introduced in July this year to make lending more transparent and banks can review their rates once every quarter.
The present liquidity crunch, which is resulting in pressure on interest rates, is likely to continue till March though its degree will come down, he said.
Banks, which borrowed a record Rs1.58-lakh-crore through the repo window on Monday, will continue to depend on the facility and the daily borrowings would come down Rs40-50,000-crore, Bhandari said.
“The current phase of high borrowing is largely due to advance tax payments. Going foward, as the Government spending comes in, things will ease,” he said.
The RBI had in its mid-quarter policy review earlier this month has taken steps to infuse additional liquidity in the system and kept its key rates--the repo at which it lends and the reverse repo at which it borrows from banks--unchanged at 6.25% and 5.25%, respectively.
Bhandari, however feels the central bank may go in for another round of rate hikes before March and raise rates by 0.25% due to inflationary pressures.
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First Published: Wed, Dec 22 2010. 04 09 PM IST