Mumbai: Home, auto and other retail loans will cost up to 0.75 per cent more, with lenders HDFC, ICICI Bank and SBI on Monday announcing an increase in interest rates following the Reserve Bank squeeze on money supply.
HDFC will raise its minimum-floating rate for home loans by 0.75 per cent to 11 per cent for new customers from 10.25 per cent from tomorrow, while the existing customers will have to shell out 0.50 per cent more at 10.75 per cent.
The new fixed rate would be 14 per cent, up 0.75 per cent. ICICI Bank increased its benchmark floating rate for retail customers, including home loan borrowers, by 0.75 per cent to 13.50 per cent from today.
For existing floating rate customers, the increase will be effective from tomorrow, the bank said.
The existing fixed rate customers, whose loans are fully disbursed, will, however, not be impacted by the increase and they will have to pay the prevailing rate.
ICICI Bank has also announced increase in benchmark rate for corporate by 0.75 per cent to 16.50 per cent.
HDFC bank also increased its deposit rates by 0.50 per cent across most maturities, while ICICI Bank raised interest rates on fixed deposits of less than Rs 15 lakh by 0.50-1 per cent with effect from tomorrow.
The announcement by two banks came close on the heels of similar announcement by the largest lender SBI.
In Ghaziabad this morning, SBI Chairman OP Bhatt said interest rates on all loans linked to prime lending rate will rise by 0.50 per cent. These include housing and auto loans.
Other banks like PNB, Bank of India and Vijaya Bank too have already announced an increase in their prime lending rates following tighter monetary stance by RBI to tame double-digit inflation.
HDFC attributed the rise in loan rates to liquidity crunch. "This is in line with the rates of interest in the economy which have hardened due to rising inflation and shrinking liquidity in the domestic market," a statement by the lender said.
Continuing its fight against inflation, which has now touched 11.42 per cent for the second week of June, RBI had raised the short term lending rate to banks (Repo) and mandatory cash reserve of banks with the central bank (CRR) by 50 basis points each, putting pressure on interest rates.
The RBI had already raised Repo rate by 0.25 per cent earlier this month. Besides, it had raised CRR by 0.75 per cent in three phases.
Bankers expect the central bank to further tighten money supply in its quarterly review of credit policy, slated for July 29.
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