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Home, Car Loan Borrowers Can Now Take A Breathe

By SiliconIndia   |   Wednesday, July 31, 2013
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Bangalore: RBI has confirmed that there will hike in the short-term deposit rates. Auto and home loan borrowers can now breathe easy as the lending rates may come down or remain the same, reports Economic Times.

According to RBI, the measures that were taken to tighten the liquidity few days ago, will exist as long as the instability remains unchanged. RBI governor D. Subbarao also gave an assurance that the rates will come down within few days.

On the other hand, banks have not taken RBIs actions seriously as they said for some days they will not hike the rates even if liquidity remains tight.

Chairman of State bank of India Pratip Chaudhuri said "Loan demand is too weak. We are waiting because we believe these steps are temporary unless they linger for very long none of the banks would increase the loan pricing. We have reasonably stable source of funding. About 2-3 weeks is something that we will have normal waiting period."

B. Prabhakar, CMD of Andhra Bank said that banks that have strong liquidity support will be able to stick to their lending rates for at least 2-3 months. In fact, Andhra Bank reduced up to 10 percent on lending rates just few days before RBI tightened the liquidity in the system.

According to Chanda Kochhar, MD and CEO of ICICI Bank, "The short-term borrowing costs of banks have gone up. What happens to the long-term rates depends on the time period. What needs to be looked at is some trend and multiplicity of factors."

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