The apex bank, in its third quarter review of its Annual Monetary Policy, hiked the repo rate by 0.25 per cent and increased provisioning in four segments.

"The RBI measures are well-balanced and not as worrisome as expected. Clearly, the need to curb inflation and ensure price stability were on top of the RBI's agenda," said Rana Kapoor, managing director and CEO, Yes Bank.

"A message has been sent that the RBI intends to tackle inflation decisively," V Vaidyanathan, executive director, ICICI Bank said.

Liquidity too could come under pressure, but enough would be available for deployment into productive sectors such as agriculture, SME segment, industry and infrastructure, they averred.

"The slight tightening visible presently is only to prevent credit flowing into unproductive sectors and speculative activities," said M B N Rao, chairman and managing director, Canara Bank.

Following the repo rate hike, cost of funds will get higher for banks. "The RBI has conveyed its message in a direct manner," said P K Gupta, chairman, United Bank of India.

Following an increase in provisioning norms, especially the commercial real estate, bankers said that loans would get costlier.

The increase in provisioning was expected, said K N Prithviraj, chairman and managing director of Oriental Bank of Commerce, adding "it is a prudent move looking at the risks involved."

Mohan Shenoy, Treasurer, Kotak Mahindra Bank, however, described the increase from 1 to 2 per cent as "very steep" and that it would "discourage banks from lending in those particular sectors."

Bankers were unanimous that credit spreads for bank borrowings will go up, making deposit mobilisation crucial.

Banks are expected to take a relook at their benchmark prime lending rates following the increase in provisioning in certain sensitive sectors and the 25 bps hike in the repo rate.

While Yes Bank will be hiking its BPLR by 50 bps effective February 1, ICICI Bank's Vaidyanathan said that several banks could follow suit.

"ICICI Bank will study the impact of the policy before taking a call on its BPLR," he said.

Prithviraj, Gupta and Rao, all public sector bankers, however, said that raising of BPLRs would be an individual call of banks and that they felt no need to hike their rates immediately.