The falling rupee may well push up the EMIs (Equated Monthly Installments) on your loans, as the Reserve Bank of India is expected to take some more steps in the coming days to support the Indian currency.
“We expect RBI to take some more measures in coming days but it is unlikely to hike policy rates in next monetary policy meeting,” felt Ananda Bhoumik, senior director, India Rating and Research, a Fitch group firm.
Banks are struggling with tight liquidity after the RBI raised short term interest rates on July 15 to support the rupee, which has fallen more than 12% since the start of May.
“I don’t expect hike in repo rate or CRR (cash reserve ratio) because it will indicate change in the stance of RBI,” said Madan Sabnavis of CARE Ratings. “Banks will be forced to hike their deposit and lending rates as RBI measures are expected to last for some time and credit demand will pick up in the coming festive season.”
“Liquidity is tight in the system and banks will have to hike lending rates if the measures taken by the RBI are not reversed soon,” said the retail banking head of a public sector bank.