ICICI Bank hikes loan, deposit rates

MUMBAI: ICICI Bank, India's largest private sector bank, has raised its retail lending rates by 50 basis points and deposit rates by 50-100 basis points with effect from Friday. This is the second rate hike by the bank this month after it raised its prime lending rate by 1% to 14.75% on February 6.

"The rise in the rates will impact all retail loans like auto loans, personal loans and home loans. However, existing home loan borrowers will be kept out of the hike," said V Vaidyanathan, executive director, ICICI Bank.

Consumer loans constitute more than half of the ICICI Bank's lending portfolio and this move by the bank is likely to pinch hard, especially as other banks have also been hiking rates after the recent hike in CRR.

ICICI gives 68% of its loans to individuals to buy houses, cars and durables. Half of ICICI's loans to individuals are home loans.

“Credit growth could begin to slow now and maybe even hurt profitability in the coming months,” said R K Gupta, who manages $68 million of assets at Credit Capital Asset Management in New Delhi.

State Bank of India had hiked its prime lending rate on February 19. Major public sector banks like Punjab National Bank, Bank of Baroda, Bank of India and Union bank of India had all hiked rates by 50 basis points last week.

HDFC Bank is the only major domestic bank yet to announce a rate hike. ICICI Bank has also hiked its deposit rates by 50-100 basis points. The deposit rate on maturities up to 890 days will rise by 50 basis points to 9.50%.