Mumbai: Despite the recent increase in CRR by the Reserve Bank of India (RBI) in its monetary policy review in October, banks are still keeping their interest rates to the pre-review levels, at least not increasing them. If the loan off-take, banks' balance sheets and the pressure to perform are anything to go by, the interest rates on home loans are expected to decline further.

One such indication came from HDFC Bank. Keki Mistry MD, HDFC Bank said, “We will review rates but the change will depend on the cost of funds. If it comes down, we will pass it on to customers. Rates will not go up but there is no commitment to cut them. However, if we announce fresh cuts, the special offers will go.”

Other banks are however non committal on any revision in interest rates. ICICI Bank Senior General Manager Rajeev Sabharwal said, "We are not planning any changes".

The festive season saw many players slashing the interest rates on their home loans by 50 to 100 basis points and even giving huge discounts on processing fees. Many banks like ICICI, had offered these discounts initially till 31 October , anticipating a decrease in rates by RBI. However, that didn't happen and there was no change in interest rates.

In fact, the CRR was increased by 50 basis points to mop up the excess liquidity in the banking system. This sucked up around 16,000 crores from the markets, thus reducing the funds available with the banks.  State Bank of India (SBI), was the only bank, which offered the discounts till 31 December.

The festive offer though brought new home loan customers, but the results weren't as expected and ICICI Bank had to extend its festival discounts indefinitely, appropriately so to mach the SBI offer. Now with HDFC contemplating another revision in home loan rates, the major players will have to catch up fast.