Indian rupee hits loan takers now, ICICI Bank, HDFC raise interest rates, home, auto loans turn costlier

Aug 22 2013, 22:19 IST
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Battered Indian rupee has increased its reach further, hitting citizens harder than ever before. Battered Indian rupee has increased its reach further, hitting citizens harder than ever before.
SummaryBattered Indian rupee has increased its reach further, hitting citizens harder than ever before.

Leading financial institutions ICICI Bank and HDFC Ltd today raised their benchmark lending rates by 0.25 per cent, making home and auto loans costlier.

How Indian rupee will hit you

The upward spike in interest rates follows fears within the system that the RBI\'s recent tightening measures to prop up the battered Indian rupee are here to stay longer than expected.

ICICI Bank followed smaller rivals and increased its lending rate by 0.25 per cent to 10 per cent with effect from tomorrow. The bank also effected a similar hike in its prime lending rate, which is applicable to existing customers on floating rates, ICICI Bank said in a statement.

Mortgage lender HDFC increased its retail prime lending rate (RPLR) by 0.25 per cent. As a result, interest on housing loans of up to Rs 30 lakh will go up to 10.40 per cent from the existing 10.15 per cent, HDFC said in a statement.

The interest rate on housing loans exceeding Rs 30 lakh will rise to 10.65 per cent from tomorrow, it said.

ICICI Bank said fixed-rate customers will not be impacted by the revision and their contracted rates will remain unchanged.

Earlier this month, ICICI Bank raised fixed deposit rates by up to 0.75 per cent across select maturities due to a series of steps taken by the Reserve Bank of India, leading to tightening of liquidity conditions.

The private sector bank had raised the interest rate on term deposits by 0.75 per cent to 7 per cent for 46-60 day maturity and to 7.75 per cent for 61-289 days, according to the ICICI Bank website.

For fixed deposits maturing between 290 days and 1 year, ICICI Bank raised the interest rate to 7.75 per cent from 7.25 per cent. For term deposits between 1 year and 389 days, the rate was raised to 8 per cent from 7.50 per cent.

Private lenders HDFC Bank, Axis Bank, Kotak Mahindra Bank Ltd and Yes Bank Ltd have raised interest rates by 20 to 25 basis points of late.

Among public sector lenders, only small-sized Andhra Bank has hiked the base rate so far, while others such as Bank of India and Union Bank slashed rates in late June.

The Indian rupee fell to a historic low of Rs 65.56 against the dollar

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