HDFC, ICICI raise home & other loan rates by up to 0.75 pc

Home, auto and other retail loans will cost up to 0.75 percent more,
with lenders HDFC, ICICI Bank and SBI announcing an increase in
interest rates following the Reserve Bank squeeze on money supply.


HDFC will raise its minimum floating rate for home loans by 0.75
percent to 11 percent for new customers from 10.25 percent from
Tuesday, while the existing customers will have to shell out 0.50
percent more at 10.75 percent.

The new fixed rate would be 14 percent, up 0.75 percent.

ICICI Bank increased its benchmark floating rate for retail customers,
including home loan borrowers, by 0.75 percent to 13.50 percent from
Monday.

For existing floating rate customers, the increase will be effective
from Tuesday, the bank said.

The existing fixed rate customers, whose loans are fully disbursed,
will, however, not be impacted by the increase and they will have to
pay the prevailing rate.

ICICI Bank has also announced increase in benchmark rate for corporate
by 0.75 percent to 16.50 percent.

HDFC bank also increased its deposit rates by 0.50 percent across most
maturities, while ICICI Bank raised interest rates on fixed deposits
of less than Rs 15 lakh by 0.50-1 percent with effect from Tuesday.

The announcement by two banks came close on the heels of similar
announcement by the largest lender SBI.

SBI Chairman O P Bhatt said interest rates on all loans linked to
prime lending rate will rise by 0.50 percent. These include housing
and auto loans.

Other banks like PNB, Bank of India and Vijaya Bank too have already
announced an increase in their prime lending rates following tighter
monetary stance by RBI to tame double digit inflation.

SBI hikes interest rates on home, car loans

Home loans and auto financing from public sector State Bank of India
would be dearer as the lender has decided to hike interest rates by 50
basis points on all credit linked to prime lending rates.

Speaking at a function in Ghaziabad on Monday, State Bank Chairman-cum-
Managing Director O P Bhatt said the bank has decided to raise the
interest rate by 0.5 percent on all loans such as home loans and auto
loans which are linked to PLR.

The revision in PLR came after SBI raised its PLR from 12.25 percent
to 12.75 percent last week following Reserve Bank's increasing its key
short-term lending rate to banks and the mandatory cash deposits that
banks need to keep with the apex bank (CRR) by 0.5 percent each.



Referring to the impact on bank's profit margins, Bhatt he hoped to
maintain the net interest margin at 3 percent this fiscal.



SBI had earlier announced to hike interest rate on fixed deposit rates
by up to 75 basis points effective from 30th June.



State Bank of India in which government has about 60 percent stake is
targeting 40 percent growth in non-interest income in 2008-09,
compared to 28 percent last fiscal.


The bank had lowered its PLR twice in February to 12.25 percent but
decided to raise by 50 basis points last week.



"The net profit of the bank is likely to be affected next quarter
though there is not much on first quarter profits ending today," he
said.


He also indicated the bank is expected to set aside at least 10
billion dollars (232.8 million) to provide for depreciation in its
treasury portfolio as interest rate rise.