Think Twice Before Taking Loans
In order to defend the rupee fall, Reserve Bank has taken up certain measures to strengthen the short-term rates and squeeze the liquidity in the system.
"Things are not good. Yields are rising so banks are sitting on huge mark to market losses. Incremental leading will be difficult," said S.L. Bansal, managing director of Oriental Bank of Commerce.
In the previous policy review, the central bank kept the rapo rate of 7.25 percent at which it lends to its system.
When Pratip Chaudhuri, the chairman SBI was asked about this, he said that the banks would take some time before announcing the hike in their interest rates.
He continued to say that "These steps (RBI's) might be temporary. Unless they linger for very long, none of the banks will increase their loan price. We have reasonably stable source of funds, so we can wait for some time."
Mr Bansal said, "Personally I think it's better for the RBI to hike rates rather than squeeze liquidity.”
However many banks fear to announce hikes as October is a festival season and it will be badly hit by the increased interest rates. It will even affect the growth of many industries.
Also Read:
7 Apps That Will Take Complete Care Of Your Finances for You
