HDFC Bank to raise loan rates soon

EMIs are set to get more expensive for existing loan takers and new auto and other loan borrowers.

Two days after RBI raised key policy rates,private sector lender HDFC Bank today said it will soon hike lending rates (interest rate hike),a decision that would make EMIs higher for existing and new auto and other loan borrowers.

“There will be an increase in lending rate,both in retail and corporate side. Most retail products,including auto loans,will see an increase in the next few days,” HDFC Bank Executive Director Paresh Sukthankar said at a media conference call.

During the December quarter,the bank’s auto loan book grew by 36 per cent.

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The Reserve Bank has raised its short-term lending (repo) and borrowing rates (reverse repo) by 25 basis points each on January 25.

The repo rate now stands at 6.5 per cent and reverse repo rate at 5.5 per cent.

“Higher ticket loans will attract higher EMIs as lending rate increase. This will lower retail demand for higher level loans,” Sukthankar said.

He,however,ruled out any further hike in deposit rates saying that the bank has increased it in the beginning of the month.

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With effect from January 1,HDFC Bank had raised its interest rates on retail term deposits by up to 1.25 per cent depending on the maturities.

Under the revised rates,a 191-days deposit will earn an interest of 7.75 per cent per annum as against 6.5 per cent earlier,the source said. Similarly,a 285-days deposit will get 7.75 per cent interest versus 6.75 earlier.

“There will be no major increase in deposit rates. Even if it happens,it would be marginal,” he said.

During the October-December period,HDFC Bank’s revenue from retail banking segment grew by 31 per cent to Rs 5,130.51

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crore. While corporate or whole sale banking business increased by 58 per cent to Rs 3,207.14 crore.