Financial Daily from THE HINDU group of publications
Wednesday, Feb 22, 2006


Group Sites

Home Page - Interest Rates
Money & Banking - Housing Finance

SBI hikes home loan rates by 25-75 bps

Our Bureau

Mumbai , Feb. 21

STATE Bank of India on Tuesday hiked interest rates on its home loans by 0.25 to 0.75 percentage points, across all tenors in the floating and fixed interest rate category.

In a statement to the Bombay Stock Exchange, the bank announced that the rate hike would be effective from March 1.

Other leading players in the home loans segment such as HDFC, LIC Housing Finance and ICICI Bank had raised interest rates by 0.5 percentage points earlier this month. IDBI Ltd raised retail lending rates by 0.25 percentage points.

ICICI Bank also raised its prime lending rate by 0.5 percentage points to 11.75 per cent. The Reserve Bank of India had increased reverse repo and repo rates by 0.25 percentage points in its mid-term review of the monetary policy last month, signalling a hardening of interest rates.

Following this, most banks raised their deposit rates. The rising deposit rates and continuing credit growth have put pressure on the net interest margins of all banks.

According to a bank official, banks have been offering as high as 8.25 per cent to 8.5 per cent on one year bulk deposits. However, not all of them have increased lending rates to match the high deposit rates. This has led to an increase in the cost of funds for banks.

Mr P.L. Gairola, Executive Director, Bank of India, said, "We are watching the movement of deposit rates. If they continue to move up, we will have no other option but to increase advance rates. As fresh deposits are available at higher costs, lending rates will also have to be raised in tandem."

Related Stories:
LIC Housing loans to get costlier by 50 bps from Friday
ICICI Bank home loans rate hike from Feb 13
Banks, housing finance cos hike lending rates

More Stories on : Interest Rates | Housing Finance | Public Sector Banks | State Bank of India

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
`Company hasn't supplied any infected chicks'

Maharashtra issues notice to Venkateshwara Hatcheries — Sourcing bird flu-affected chickens
Traditional items drive export growth in April-Nov
GAIL notice to BSE — Panna-Mukta-Tapti team to approach Oil Ministry
IT industry to urge Bush to raise H1-B visa cap
Fund buying lifts Sensex 88 points
Logix shortlists two US cos for buy-out — Board meet today to discuss fund-raising
MFs may get more leeway for overseas investments
Restrictions likely on exposure to shares of individual companies

SBI hikes home loan rates by 25-75 bps
Oracle launches embedded biz unit — To set up innovation labs in India

The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |

Copyright 2006, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line