
Home loan to cost more
With the RBI signaling a quarter per cent increase in the short-term interest rate, home loan interest rates are expected to go up by 0.25 per cent to 0.50 per cent.
Since there is already pressure on the deposit rate after the redemption of India Millennium Deposit (IMD) of Rs 30,000 crore, bankers feel short-term rates are bound to go up in the medium term as there is pressure on the cost of deposits.
ICICI Bank executive director Chanda Kochar agreed that there is an upward bias on interest rates. "We will watch the scenario for sometime before taking a decision," she said.
Punjab National Bank chairman and managing director S.P. Gupta said there is pressure on the deposit rate. "However, PNB does not intend to increase its lending rate till March 31. After that we will evaluate the scenario," he said.
Another leading banker said some of the new generation banks and even SBI have already increased the deposit rate in the recent past and are expected to increase it further, which would impact the loan market.
Currently, the variable interest rate on home loan ranges between 7.75 per cent and 8.25 per cent, depending upon the time and size of the loans. The fixed rate is around 8.5 per cent.
Bankers feel in the current scenario where liquidity is under pressure, bankers are left with little option but to pass on the burden to consumers. This includes retail as well as corporate loans. In fact, ICICI Bank has recently increased its long-term prime lending rates.
"In order to increase their exposure in the retail segment, some of the banks have reduced the lending rates substantially, now they are feeling the pinch and will have to harden the rates," said another banker.
The RBI has raised short-term interest rates in an attempt to curb inflation. The Central Bank also lifted its GDP growth forecast for financial year 2006, from 7-7.5% to 7.5-8%. Though worried about the prospects of an upward pressure on inflation, the RBI maintained its annual target of 5-5.5 per cent.
It has decided to increase the fixed reverse repo rate by 25 basis points from 5.25 per cent to 5.50 per cent. Since the repo rate will continue to be linked to the reverse repo rate and the spread between the reverse repo rate and the repo rate has been retained at 100 basis points, the fixed repo rate would be 6.50 per cent.

Murder in Bihar’s Saran district sparks violence against police
- At least eight policemen were injured in the two-hour mayhem that began around 9.30 am.

Covaxin demonstrates prowess of Atmanirbhar Bharat, says ICMR chief
- Bharat Biotech developed the country’s first indigenous vaccine, Covaxin, in partnership with ICMR.

‘Nails put in farmers’ path, if this preparation was at borders...’: Thackeray

'Be ready to combat new and emerging diseases: VP Naidu's message to scientists

Jawans to take part in top military meet for first time, PM Modi to address it
- The military is expected to make a presentation to the PM on the situation along the borders and progress made towards the creation of theatre commands.

Nirav Modi case: Lawyer says ex-SC judge Katju made ‘contemptuous’ remarks

Anurag Kashyap, Tapsee Pannu raided in tax evasion probe: 10 points
- Maharashtra minister Nawab Malik has alleged that the raids on Anurag Kashyap and Tapsee Pannu were an attempt to suppress the voice of those who speak against the central government.

Arunachal to send proposal to govt for dereservation of some reserve forests: CM
- Khandu said, he had recently asked the chief secretary to compile details of such reserve forests and send a proposal to the Centre with a request to use such forest land for carrying out development work.

BSF jawan killed, two others injured in accident in firing range in Jaisalmer
- Five jawans were taking part in a night firing practice when the incident took place.

To improve green cover, Telangana MP helms initiative to promote planting trees
- Santosh is planning to set up a Green India Foundation to take up the tree plantation programme extensively and also spread it to other parts of the country.

Request to vaccinate Dalai Lama at his premises under consideration: authorities
- the Tibetan government-in-exile, had asked the Centre and the Kangra district medical officer to vaccinate the Dalai Lama and those working around him at the earliest,

Kerala minister says notices to investment fund board 'cheap poll gimmick'

‘Won’t lose match as stadium’s name is Narendra Modi’: Thackeray’s dig at Centre

In bid to expand base after poll debacle, JD (U) forms upper caste cell
- The focus on the upper caste, according to party leaders, is mainly to draw them closer to the party by letting them know the inclusive development that chief minister Nitish Kumar has been able to usher in over the last one and half decades.
