Banks raise home loan rates to survive: ICICI

MUMBAI: Despite the Finance Minister asking public sector banks not to hike home loan rates, top private sector lender ICICI Bank, accounting for 30 per cent of home loans, has said all lenders would have to increase rates for their own survival.

"Every bank has to raise interest rates on consumer loans in the backdrop of increasing cost of funds in order to survive," Deputy Managing Director of the country's largest private sector bank Chanda Kochhar told reporters on the sidelines of a function late Thursday evening.

Kochhar, a renowned personality of the banking industry, said, "We always maintain that if the cost of funds go up, we will have no option but to pass it on to the consumer...we have to maintain net interest margin (NIM)."

ICICI Bank has hiked home and other retail loans by one per cent with effect from Friday and interest rates on fixed deposits of less than Rs one lakh of a five-year tenure by 1.25 per cent.

ICICI Bank and HDFC, another private player, together account for nearly over 60 per cent of home loans. However, HDFC has earlier said it would not go for a hike at the moment. Public sector banks accounted for about 25 per cent of home loans.

Justifying the hike, ICICI Bank had earlier said deposit rates were sharply going northward, resulting in rise in cost of funds.