After the hike
*Reverse repo and repo rate increased by 0.25 per cent
*Bank rate and CRR left unchanged
*Highest priority to contain inflation at 5-5.5 per cent
*GDP forecast for 2006-07 unchanged at 7.5-8 pc
*RBI concerned over money supply, deposit and credit growth above indicated projections
*Appropriate liquidity to be maintained to meet legitimate credit requirement, consistant with price and financial stability.
*Exchange rate of rupee depreciated by 4.7 per cent against dollar
*Export growth in dollar terms declined to 16.9 pc during April-June 2006 from 35.4 pc a year ago
*Merchandise import also decelerated to 17.7 pc in April-June from 45.4 pc a year ago
*Forex reserves increased by $11 billion over $162.7 billion as on July 14, 2006
*Petroleum, Oil and lubricants (POL) import increased to 39 pc from 31pc
FOLLOWING TUESDAY'S 25basis-point hike in short-term rates by the Reserve Bank of India, home loans and consumer loans (like auto loans) are expected to become costlier by 50 basis points soon.
Bankers had been waiting for the RBI's policy announcement. The cost of funds is clearly under pressure; we were waiting for the RBI decisions, said a leading banker.
Sources said HDFC was set to increase home-loan rates by 50 basis points (to 9.5 per cent for floating-rate loans and 10.5 per cent for fixed-rate loans).
But ICICI Bank is not going to increase the rate immediately. Its executive director Chanda Kochar said: We'll evaluate the liquidity scenario and cost of funds, and take a final decision in case our margins aren't protected. Currently, it was not the case, she said.
ICICI Bank had increased homeloan rates by 50 basis points last month.
S.C. Gupta, CMD, Punjab National Bank, said the writing on the wall was clear that interest rates would be increased. In order to guard profitability, we've to protect interest margins, he said. As far as PNB is concerned, we'll take a final decision in a week's time.
From: Tribune, 26/07/06
