Amid speculations that home and personal loan rates may go up, government said on Wednesday the 0.25 per cent hike in Reserve Bank of India's short term lending rate is not intended to make loans costlier but to make banks self sufficient for lending.
"It (Repo rate hike) is not intended to make loans expensive," Minister of State for Finance P K Bansal said, responding to a query on whether loans would become costlier after the revised repo rate on Tuesday.
Respective boards of the banks have to take decisions on lending rates and the government has no role in it, he said.
Bansal said the 0.25 per cent increase in repo rate to 7.25 per cent is intended to contain inflation and manage liquidity.
Raising the repo rate is only a signal that getting liquidity from the RBI would be expensive, RBI Governor Y V Reddy said after releasing the annual policy review statement on Tuesday.
Tthere is a need for greater fairness and transparency in regard to the housing sector because of complaints in this regard, he said.
Though banks with enough liquidity see no immediate rate hike including in the home and auto loan segment. They were of the view that home loans above Rs 2000,000 (Rs 2 million), personal and consumer loans, loans for investing in equity market may be repriced by the banks facing liquidity problem and borrow from RBI to meet short term requirements.
RBI wants banks to lend to the extent of their own resources mobilised through deposits and not be aggressive in lending to the non-productive sectors.
