INSUBCONTINENT EXCLUSIVE:
MUMBAI: Rising interest rate is set to pinch retail borrowers harder as equated monthly installments (EMI) will remain elevated or rise
further for the rest of the fiscal year till March 2019.
Earlier this month, large retail lenders such as State Bank of India (SBI), HDFC
Bank, ICICI Bank, Bank of Baroda and Union Bank of India hiked their benchmark marginal cost based lending rate (MCLR) by 5 to 20 basis
One basis point is 0.01 percentage point.
Private bank HDFC Bank and stateowned SBI both hiked their MCLR by a steep 20 bps across the
It has now increased by 50 bps since March this year from a low of 7.95 per cent.
Higher rates mean borrowers will have to shell out more on
without a doubt and there is now no question of rates doing down
banking, Axis Bank.
Strong economic growth indicating higher demand, and worries over inflation, mainly due to higher crude oil prices are
likely to keep interest rates elevated.
Concerns about the depreciating currency have seen some analysts expecting a faster rate increase by
warrants policy action We expect a 50 bps hike in the repo rate in the fourth quarter 2018 (up from the earlier 25 bps), taking it to 7 per
price inflation around 4 per cent.
Figures released earlier this month showed that consumer inflation had eased to 3.69 per cent in August,
below the RBI target.
However, worries over a widening current account deficit has kept money markets under pressure and led to the rupee
falling to all-time lows.
Bankers say money availability has tightened as indicated by the rise in the benchmark 10-year bond yield which
has risen 100 bps from 7.12 per cent in April to 8.12 per cent now
In other words, borrowing rates are unlikely to come down in a hurry.
