HDFC Bank hikes base rate by 0.2 percentage points
India’s second largest private sector lender, HDFC Bank, has hiked base rate by 0.2 percentage points making auto, corporate and other loans costlier.india Updated: Aug 07, 2013 23:49 IST
India’s second largest private sector lender, HDFC Bank, has hiked base rate by 0.2 percentage points making auto, corporate and other loans costlier.
“The base rate of the bank has been increased to 9.80% from 9.60% with effect from August 3,” said Ashish Parthasarthy, treasurer, HDFC Bank. “With hike in base rate we still remain one of the lowest in the market.”
HDFC Bank becomes the second lender after Yes Bank to hike lending rate after the status-quo monetary policy review of the Reserve Bank of India last week.
In order to contain rupee depreciation, the RBI has taken slew of measures in the past couple of weeks resulting in the tight liquidity situation for the banks. On July 15, the central bank put in place measures to restore stability in the foreign exchange market, including raising the marginal standing facility and bank rates to 10.25% and restricting access by way of repo window to R75,000 crore.
Other banks are expected to hike lending rates in the coming days if liquidity tightening measures are not rolled back. With deposits growth remaining muted, banks are expected to see a pick-up in credit demand from next month due to onset of festive season. Rise in credit demand may force banks to hike deposit rates if liquidity in the system remains tight. “When deposit rates go up lending rates also rise,” said retail head of a public sector bank.