In what could affect home and car loan buyers, SBI said it plans to hike its base rate by December as also other lending rates due to an increase in its cost of deposits.India’s largest bank was one of the few lenders which had not revised its base rate – the lowest rate at which it can lend – of 7.50 per cent after the Reserve Bank’s mid- quarter policy review on September 16.
“They (lending rates) were raised about two months ago. There has been a huge amount of pressure on liquidity…its not just getting tighter, but liquidity has become more volatile in the system. In this quarter, you will see a hike in base rate,” SBI Chairman O P Bhatt said.”Every interest rate in the system has gone up, plus there is also the pressure of increasing the provisioning to 70 per cent…I think the interest rates will go up on the lending side.” Bhatt said during the September quarter, cost of deposit was amongst the lowest the industry has witnessed in the last one year, but it has started moving north since September-end.Credit growth has also been “muted” this year at around 18-19 per cent, Bhatt said, adding banks are unlikely to meet the target set by RBI of achieving 20 per cent growth.
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