Bankers may not raise lending and deposit rates so soon
By Joseph Samson
Jan 27, 2011
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Following the recent policy rate hike by banking regulator, Reserve Bank of India, bankers have said that it is unlikely that an immediate interest rate hike will be followed by them in both deposit and lending regime. RBI has raised repo and reverse repo rates by 25 basis points each.

"Immediately after a rate hike like this, and a very small hike, it need not necessarily translate into a hike (lending and deposit rates by banks)," State Bank of India Chairman, O P Bhatt said.

Bhatt added that however, the asset liability committee (ALCO) meeting of State Bank of India will be held soon.

"But there is certainly an upward bias in interest rates," he said.

A similar view has also been presented by the largest private sector lender of the country, ICICI Bank.

"A 0.25 per cent increase in policy rates does not immediately translate into a hike. The deposit and lending rates depend on how the cost of funds are moving and demand and supply of money. The cost of deposits is going up. So there is certainly an upward bias in interest rates," CEO and MD of the bank, Chanda Kochhar said.


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