Home loans rates may have gone up, but banks seem to be in no hurry to hoist their benchmark prime lending rates.
Close on the heels of a cut in the interest rate on long term domestic deposits, State Bank of India is now contemplating a downward revision in its prime lending rates.
Indian Overseas Bank on Tuesday announced interim dividend of 12 per cent to its shareholders and a reduction of 0.5 per cent in its primary lending rate, taking it to 11 per cent.
The new rates vary from 8.80 to 9.05 per cent on various slabs of loans.
HDFC Bank, the country's second largest private sector bank, has decided to follow its counterpart, ICICI Bank in increasing lending and deposit rates, in response to monetary tightening by the Reserve Bank of India.
Axis Bank reduced its prime lending rate by 0.5 per cent to 15.25 per cent, while Bank of Rajasthan slashed it by 0.25 per cent to 9.75 per cent. The private sector banks' lowering of their benchmark rates came close on the heels of another private sector lender, HDFC, responding to the repeated monetary measures introduced by the Reserve Bank of India this year.
Several PSU lenders, including Canara Bank, Bank of India and Bank of Baroda, Syndicate Bank, have already slashed their benchmark prime lending rates by 0.75 per cent after Finance Minister P Chidambaram met state-owned banks' heads to discuss the possibility of rate cuts.
Banks may have kept overall lending rates unchanged despite a rise in policy rates but have started increasing rates on corporate loans in the sub-benchmark prime lending rate (BPLR) segment.
The base rate, or the minimum lending rate, of the country's second largest private sector bank will become 9.6 per cent from the existing 9.7 per cent, sources said.
Shortly after the Reserve Bank of India cut its signaling rates and the announcement of stimulus package, leading lenders HDFC Bank and Union Bank of India on Monday reduced their benchmark prime lending rates (PLR).
"We are open for further reduction in prime lending rate," Indian Banks Association Chairman Dalbir Singh said in New Delhi while addressing a seminar organised by PHD Chamber of Commerce.
The base rate, or the minimum lending rate, of HDFC Bank will become 9.8 per cent from the existing 10 per cent, sources said.
Indian state-owned Bank of Baroda said on Monday it would cut its prime lending rate by a quarter percentage point to 10.75 per cent from June 1.
Most of the public sector lenders, including Punjab National Bank, Bank of Baroda and Canara Bank, have hiked their lending rates after the Reserve Bank of India increased its short-term lending (repo) and borrowing (reverse-repo) rates by up to 50 basis points on July 27.
Mortgage lender HDFC Ltd on Friday hiked its lending rate by 50 basis points hours after the Reserve Bank raised the benchmark interest rate to tame inflation. The move would increase EMIs for housing loans by the firm. "HDFC increases its Retail Prime Lending Rate (RPLR) on Housing loans, on which its Adjustable Rate Home Loans (ARHL) are benchmarked, by 50 basis points, with effect from October 1, 2022," the country's biggest housing finance company said in a statement.
Ahead of the Reserve Bank of India's Monetary Policy announcement, a leading economic thinktank said on Monday that lending rates might dip marginally in the coming months due to recent decline in inflation.
"Benchmark prime lending rate is revised from 12.75 per cent to 13.75 per cent," the bank said in its filing on BSE. The decision by the largest lender was expected but came days after a host of other lenders including HDFC, ICICI Bank, IDBI Bank, Bank of India, Axis Bank, Canara Bank, and Yes Bank announced revisions in interest rates.
Bankers expect credit to pick up after Jan 15.
RBI Governor Raghuram Rajan asked banks to follow suit and pass on the rate cuts.
Country's largest lender State Bank of India on Monday slashed prime lending rate by 0.25 per cent to 12.50 per cent, a decision that will make housing and car loans cheaper.
Interest rates are set to fall again with public sector banks today agreeing to lower deposit and lending rates next month.
With this reduction, the banks BPLR will fall to 12.50 per cent from January 1. The bank has also lowered its deposit rates by 25-100 bps across various maturities. The maximum rate available would be 8.75 per cent for deposits of two years and above.
The State Bank of India on Saturday hiked its benchmark prime lending rate by 0.50 per cent from 12.25 per cent to 12.75 per cent.
The new rate now stands at 11.75 per cent as against the earlier 12.25 per cent, the public sector lender said in a filing with the Bombay Stock Exchange.
The State Bank of India (SBI) on Wednesday said that it was examining the possibility of another round of reduction in its benchmark prime lending rate (BPLR), while adding that it was offering the cheapest rates across loan categories.
State Bank of India on Monday ruled out any immediate hike in lending rates amid fears of a rise in interest rates in the economy due to surge in inflation.
India has managed high government debt-to-GDP, a slowing domestic revenue engine, lower household savings and a more hostile geopolitical environment separately in the past. But together, they threaten to undo the growth narrative on which today's optimism rests, warns Debashis Basu.
The country's largest lender, SBI, has reduced marginal cost of funds based lending rate by 0.9 per cent from 8.90 per cent to 8 per cent for one-year tenure, the bank said in a statement.
The increase comes into effect from Monday, a bank official told PTI in Mumbai.
SBI cuts priority sector lending rates by 50bps
The cost of deposits is on the rise, but banks can't raise interest rate on close to 60% of their loan books, points out Tamal Bandyopadhyay.
Borrowers haven't heard the last of interest rate hikes, as more banks are preparing to raise lending rates in the days ahead to offset increase in their cost of funds.
HDFC Bank has hiked its benchmark prime lending rate (BPLR) by 0.25 per cent to 15.25 per cent with immediate effect.
Faced with abundant liquidity and flat credit off-take, banks are reversing interest rate hikes charged to large companies.In the first three months of this fiscal, most blue chips could access loans at a maximum of one to two percentage points below the PLR. Today, short-term loans (that is, for less than one year) for such companies are available between 7.5 and 9 per cent.
The Reserve Bank of India today kept key policy rates unchanged, but put the onus of further reduction in interest rates on banks. However, most lenders indicated that any such decision will be linked to a fall in the cost of funds.
The country's second largest private sector lender HDFC Bank on Monday slashed benchmark lending rate by 25 basis points to 15.75 per cent.
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