Interest rates on home and other loans from ICICI Bank have gone up by 25 basis points following a decision by the country's largest private lender to increase its benchmark rates.
As a result of this increase interest rates on ICICI Bank's home loans will be 25 basis points higher than its rivals HDFC and State Bank of India, which offer loans at 10.25%. The bank said the increase was in line with the hike in its cost of funds. The increase in Base Rate, which has taken place within a fortnight of Reserve Bank of India raising policy rates by 25 basis points, will be effective from July 4. A 25 basis points increase in lending rates would push up the equated monthly instalment on a 20-year, Rs 30 lakh home loan by over Rs 500. ICICI Bank is the first major lender to respond to RBI's policy measures. Some lenders are holding back a hike over fears that credit growth may falter.
Last week, ING Vysya Bank was the among the first to revise rates with a 25 basis point hike in its Base Rate. Following an increase in policy rates last week, HDFC said that it would wait to see to what extent the increase in rates pushes up cost of funds. In an interview to ET Now On Thursday, Krishna Kumar, managing director, State Bank of India said the bank would soon have a meeting of its asset liability committee and take a view on interest rates.
According to Kumar, Reserve Bank is likely to increase rates in its July policy review as well if inflation continues to remain high.
ICICI Bank's Base Rate will now be 9.5% as against 9.25% at present. The Base Rate is the benchmark for all loans availed after July 1, 2010. The prime lending rate (PLR) which is the benchmark for older rates and the Floating Reference Rate – the peg from retail loans have also been hiked by 25 basis points.
Last week in an interview to a news agency, NS Kannan, chief financial officer, ICICI Bank said that overall loan growth for the bank in 1011-12 would be around18%-20%, which is in line with the industry, but slower than predictions (made at the start of the fiscal) of a 23%-25% industry credit growth. Kannan also said that retail loan growth this fiscal was likely to lag at 15%-17%, with retail portfolio likely between 35%-39% of the total loan book.
[Source]
As a result of this increase interest rates on ICICI Bank's home loans will be 25 basis points higher than its rivals HDFC and State Bank of India, which offer loans at 10.25%. The bank said the increase was in line with the hike in its cost of funds. The increase in Base Rate, which has taken place within a fortnight of Reserve Bank of India raising policy rates by 25 basis points, will be effective from July 4. A 25 basis points increase in lending rates would push up the equated monthly instalment on a 20-year, Rs 30 lakh home loan by over Rs 500. ICICI Bank is the first major lender to respond to RBI's policy measures. Some lenders are holding back a hike over fears that credit growth may falter.
Last week, ING Vysya Bank was the among the first to revise rates with a 25 basis point hike in its Base Rate. Following an increase in policy rates last week, HDFC said that it would wait to see to what extent the increase in rates pushes up cost of funds. In an interview to ET Now On Thursday, Krishna Kumar, managing director, State Bank of India said the bank would soon have a meeting of its asset liability committee and take a view on interest rates.
According to Kumar, Reserve Bank is likely to increase rates in its July policy review as well if inflation continues to remain high.
ICICI Bank's Base Rate will now be 9.5% as against 9.25% at present. The Base Rate is the benchmark for all loans availed after July 1, 2010. The prime lending rate (PLR) which is the benchmark for older rates and the Floating Reference Rate – the peg from retail loans have also been hiked by 25 basis points.
Last week in an interview to a news agency, NS Kannan, chief financial officer, ICICI Bank said that overall loan growth for the bank in 1011-12 would be around18%-20%, which is in line with the industry, but slower than predictions (made at the start of the fiscal) of a 23%-25% industry credit growth. Kannan also said that retail loan growth this fiscal was likely to lag at 15%-17%, with retail portfolio likely between 35%-39% of the total loan book.
[Source]
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