Major bankers have said that interest rates are not likely to go up following the RBI's decision to suck out more funds from the banks which normally makes.
NEW DELHI: Housing, auto and personal loan seekers can relax as major bankers have said that interest rates are not likely to go up following the Reserve Bank of India's (RBI) decision to suck out more funds from the banks which normally makes borrowings costlier.
Moreover, on deposit front, some bankers have said they are likely to maintain the current rates.
"I don't see much pressure on housing loan and personal loan front although a few thousand crore from banks are going to be impounded by the Reserve Bank," Punjab National Bank Chairman and Managing Director KC Chakrabarty said.
The RBI in its mid-term review of the credit policy, raised the Cash Reserve Ratio (CRR) by 0.5 per cent to 7.5 per cent appropriating Rs 16,000 crore of bank funds.
However, the RBI decision, the PNB chief said, would put pressure on Net Interest Margins of the banks which can be met by reducing cost of deposits or lowering the administrative cost.
"Anticipating the hike in CRR, we had already slashed deposit rates on selective maturities by 25 basis points a day before the policy announcement," he said.
Some bankers are of view that since the busy credit season has started, increased credit off-take would take care of the impact of the CRR hike.
According to Oriental Bank of Commerce (OBC) Executive Director Allen CA Periera, housing, personal and auto loans are likely to remain at this level for time being.
Pointing out that credit off-take has picked up and going by the past trend advances generally goes up in the third quarter and fourth quarter, he said, 'in such a scenario, banks would not be forced to cut deposit rate to maintain its margin.'
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