ICICI BANK HDFC HIKE INTEREST RATES

RBI likely to further tighten its monetary policy, feel experts

ICICI Bank has announced an increase in interest rates for various tenors of retail fixed deposits by 75-100 basis points with effect from August 1.
The bank has also announced an increase of 75 basis points in its floating reference rate (FRR) for consumer loans (including home loans) with effect from July 31. The revised FRR will be 14.25 per cent as against 13.50 per cent per annum at present. Existing fixed rate customers will not be impacted by the increase and their contracted rates will remain unchanged, ICICI Bank stated in a release.
The bank has also announced an increase of 75 basis points in its Benchmark Advance Rate (I-BAR). The revised I-BAR will be 17.25 per cent as against 16.50 per cent per annum at present.

HDFC, for its part, has revised its floating interest rates on home loans for both existing and new customers with effect from August 1.
This is in line with the rates of interest in the economy, which have hardened due to rising inflation and shrinking liquidity in the domestic market, HDFC stated in a release.

HDFC has increased its Retail Prime Lending Rate (RPLR) on which its Adjustable Rate Home Loans (ARHL) is benchmarked, by 75 basis points with effect from August 1.
The increase in RPLR will affect existing borrowers whose loans come up for re-pricing on or after August 1. HDFC follows a three-month reset cycle for its floating rate loans and hence the change in RPLR will impact the existing customers over the next three month period, it stated.

With this increase, the total increase in HDFC’s RPLR from January to date is 100 basis points as compared to 150-basis point rise in 10-year government securities rates.

For new home loan customers, the ARHL loans will now be priced at a minimum of 11.75 per cent while the fixed rates will be 14 per cent per annum.

Public sector lender Punjab National Bank on Tuesday announced an increase of up to one percentage point in its prime lending rate to 14 per cent. Private sector Axis Bank also hiked its PLR by 50 basis points to 15.75 per cent, which came into effect on Tuesday, while Jammu & Kashmir Bank hiked its PLR by up to one percentage point.
As a part of its measures to tighten liquidity in the banking system to counter inflation, the Reserve Bank of India has hiked the short-term inter-bank lending rates (repo rate) and mandatory cash reserve (CRR) by 50 basis points and 25 basis points, respectively.

Experts believe that home loans could get costlier again in the coming months as the RBI is expected to further tighten its monetary policy with additional CRR and repo rate hikes.