HDFC and public sector banks banks hike interest rates, EMIs to go up
merisarkar news service, New Delhi, February 02, 2011
EMIs set to go up
Retail loans have become costlier as commercial banks have hiked lending rates post the Reserve Bank's decision to hike policy rates to fight inflation.
On January 25, RBI had raised the repo rate (at which the RBI lends money to banks) and the reverse repo rate (the rate at which RBI borrows funds from banks) by 0.25 percentage points.
Following this, seven lenders including home finance major HDFC, have raised interest rates by 0.25-0.50 percentage points so far. The hike in interest rates means a higher EMI (equated monthly installment) outflow on home and auto loans. Corporate loans too would become expensive.
Some banks like Bank of Baroda (BoB) and Oriental Bank of Commerce (OBC) have also raised the deposit rates which means that consumers will now earn more on their fixed deposits. BoB has raised its deposit rates by 0.50 per cent while OBC has decided to raise the fixed deposit rates by 0.25 percent on deposits of varying maturities.
Indian Bank, Indian Overseas Bank (IOB), Bank of India (BoI) and Dena Bank have hiked their lending rates while Punjab National Bank, Allahabad Bank and Punjab & Sind Bank have hiked both deposit and lending rates.
Housing finance major HDFC too raised its floating interest by 25 basis points with effect from Tuesday for both existing and new customers. "This is in line with the interest rates in the economy, which have hardened due to an increase in policy rates, inflation and liquidity in the domestic market," HDFC said.
