Mumbai: Bankers have said that both lending and deposit rates are likely to go up by a minimum of 0.5%, as a fall out of Reserve Bank announcing a hike in short-term lending rate and cash reserve requirement of banks.
“We have to assess what is the actual impact and a decision would be taken accordingly. A minimum 0.5% hike in our BPLR and deposit rates cannot be ruled out,” state-owned Punjab National Bank’s Chairman and Managing Director K C Chakarabarty told PTI here.
Announcing the quarterly review of credit policy, RBI hiked CRR by 0.25% to 9% and Repo by 0.5% to 9%.
Union Bank of India’s Chirman and Managing Director M V Nair said the bank’s Asset Liability Committee (ALCO) would look at the liquidity condition of the bank after the hike.
The lender is likely to up its BPLR, Nair said, but did not say what would be the range of revision.
“Our ALCO will meet soon to assess the impact. There is a clear pressure on the profitability of banks after the present hikes in RBI key-rates. We may revise our BPLR upwards,” Nair said.
Bank of Baroda’s Chairman and Managing Director M D Mallya said RBI’s tone has been cautious about credit expansion given the present economic conditions, but the hike in CRR and Repo has caused an upward pressure on interest rates.
“Though it is too early to comment on whether BoB will hike its BPLR, there is an upward pressure on our interest rates,” Mallya said.
However, he ruled out an immediate hike in BoB’s deposit rates as it had increased its rates only recently.
Echoing a similar view, Kotak Mahindra Bank’s Group Head, Retail liabilities, K V S Manian said the 0.5% in Repo rate has come as a signal to the industry, which would push up the borrowing costs.
“If this (hike in Repo) is a signal, we have to see how the market is responding to that. We would like to watch the market movements and take decisions accordingly,” Manian said.
He also said that there exists a visible upward pressure on the interest rates of the bank both on the asset and liability side.