(Excl Ventures News) In what analysts believe could signal a rising interest rate regime in the offing, India's largest private sector lender ICICI Bank on Thursday said it had hiked its auto loan rates by up to 0.5 per cent and withdrawn its 8.25 per cent special home-loan scheme.
According to an ICICI Bank spokesperson auto loans rack rates had been raised by 0.25-0.50 per cent depending on segment and tenor with effect from 5 March.
Though the bank did not give any reason for the rate hike, according to analysts the rate increase has come largely on cues received from the Reserve Bank in its last monetary policy review.
With a view to flush excess liquidity out of the system, the RBI hiked the cash reserve ratio or the amount banks have to deposit with the RBI at zero interest rate by 0.75 per cent to 5.75 per cent absorbing Rs36,000 crore from the system.
With the hike, interest on new auto loans would now be charged in the range of 9.75 -11 per cent.
The bank also withdrew its special home-loan scheme under which it offered home-loans at 8.25 per cent fixed rate for two years, effective from 1 March, according to the spokesperson.
ICICI bank is currently offering home loans up to Rs30 lakh at 8.75 per cent, loans between Rs30 lakh to Rs50 lakh at 9 per cent and above Rs50 lakh at 9.50 per cent.
Kotak Mahindra Bank, another private sector lender and the group's car loan financing arm also announced hikes in their home and car loan rates respectively on Thursday.
Meanwhile another private sector lender HDFC bank announced it has raised lending rates on auto loans.
Comment :
Th lowest interest rate reached during the period after the global economic slide began, was 8% for under 30L loan. We would now see the base rate rising since the economy has recovered. In months to come, economic stimulus packages would get withdrawn which will drive interest rates higher.
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