After more than half-a-dozen banks hiking their lending rates, at least three more banks are likely to raise their rates this week in the face of tight monetary policy announced by the Reserve Bank of India last week.
Leading lenders like Bank of Baroda, Bank of India and Union Bank could be among the public sector banks that are set to hike their rates by 0.5-0.75 per cent. They are understood to be contemplating this week their asset liability committee (ALCO) meetings, which decide on the rate hikes.
Many lenders, including the second largest public-sector lender Punjab National Bank and the biggest private sector lender ICICI Bank, have hiked their benchmark prime lending rates (BPLR) by up to 0.75 per cent, shortly after RBI increased its key rates last-week.
BoB’s executive director V Santhana Raman said that the bank might decide to hike its BPLR by 0.5-0.75 per cent at its ALCO. “We were watching that how the market is responding to the rate hikes by some of the leading banks,” said Santhana Raman. “Given the pressure on the margins, the bank might revise its BPLR very soon.”
BoB is also expected to look at increasing their deposit rates marginally, he said.
Other biggies in public-sector like Union Bank of India and Bank of India are also mulling a hike in their loan rates under pressure on their net interest margins — the spread between interest earned and interest expended.