Here's some good news for you. Large banks like State Bank of India and ICICI Bank are unlikely to increase lending rates immediately despite a rise in interest rates in the money market. However, small and mid-size banks that have low retail deposits may come under pressure.
"At present, we are not looking at increasing rates," said A Krishna Kumar, managing director, State Bank of India.
SBI's stance on interest rates sets the trend for market as other major banks take the cue from it. However, your EMIs may rise if the Reserve Bank of India increases rates any further.
SBI has a current account to savings account (CASA) ratio of around 45%. A high CASA ratio helps banks to keep their funding costs low.
ICICI Bank refused to comment for the story but the bank largely depends on retail deposits for lending.
"Short term rates have increased but our incremental short term funds are very small. We will continue to watch market conditions, but with 71% of our deposits linked to retail it should not impact us," Chanda Kochhar, MD and CEO, ICICI Bank, had said while announcing the result on August 31.
Though the larger banks will be able to maintain status quo on rates, small and mid-sized banks may come under pressure due increasing rates in money market.
"Banks with low CASA ratios and liabilities maturing in the short term will be inclined to hike deposit and lending rates," said Kajal Gandhi, banking analyst, ICICIdirect.com.
Union Bank of India, Bank of Baroda did not comment for the story while Keki Mistry, CEO, HDFC, India's largest mortgage lender could not be reached for comment
Axis Bank, on Monday, announced to hike base rate by 0.25 percentage points to 10.25% while earlier this month HDFC Bank raised base rate by 0.2 percentage points to 9.8% and Yes Bank hiked it by 0.25 percentage points to 10.8%.