Home, auto loan rates may not go up

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PTI

Home, auto loan rates may not go up

2009-10-27 16:14:16
Last Updated: 2009-10-27 16:15:29

Aiming to tackle inflationary pressures, the Reserve Bank on Tuesday increased a key statutory deposit ratio for banks by one percentage point to 25 per cent but the move is not expected to push interest rates up.
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Barring the hike in Statutory Liquidity Ratio, the deposits that commercial banks are to park in government securities, the central bank left other key policy rates and ratios unchanged.

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Retail and corporate loan rates may stay the same as bankers ruled out any increase in lending rates in the next three to four months, thanks to the RBI keeping almost all key rates unchanged.

"I do not see any change in the interest rates till March. There is no liquidity problem in the system and credit off-take is less than expected," Corporation Bank Executive Director Asit Pal told PTI.

RBI chief: Banks can further cut lending rates

SLR hike

In view of difficult macroeconomic situation and liquidity conditions in the global and domestic financial markets after the collapse of Lehman Brothers, the statutory liquidity ratio (SLR) of scheduled commercial banks (SCBs) was reduced from 25 per cent to 24 per cent of their NDTL with effect from November 8, 2008.

The liquidity situation has remained comfortable since mid-November 2008 as reflected in the surplus funds being placed by banks daily in the LAF window of the Reserve Bank. Accordingly, it has been decided to restore the SLR for scheduled commercial banks to 25 per cent of their NDTL with effect from the fortnight beginning November 7, 2009.

RBI raises SLR by a percentage, other key rates unchanged

SCBs are currently maintaining SLR investments at 27.6 per cent of their NDTL, net of LAF collateral securities, and 30.4 per cent of NDTL, inclusive of LAF collateral securities. As such, the increase in the SLR will not impact the liquidity position of the banking system and credit to the private sector.

Although the one per centage point hike in SLR could suck up over Rs 30,000 crore (Rs 300 billion) from the system, the average SLR of banks is already at 27.6 per cent.