In a major relief to India Inc and retail customers at the onset of the festive season, major banks have deferred their earlier decision to raise lending rates ? which was expected after Reserve Bank of India (RBI) hiked key policy rates on September 16.

Leading banks in the public and private sector which had earlier said there was clearly an upward bias in the rates are now planning to take a call on their lending rates ? both base rate and benchmark prime lending rate (BPLR) ? in October or would wait till the central bank announces its half-yearly policy review on November 2.

Currently, banks have almost 60-70% of their customers under the benchmark prime lending rate (BPLR) system, while the rest are under the base rate regime which essentially prohibits banks from lending below the rate.

Major public sector banks except State Bank of India (SBI) have set base rate at 8% while SBI, along with private sector majors like ICICI Bank, HDFC Bank and Axis Bank have pegged their base rate at 7.5%.

Said M Narendra, executive director, Bank of India: ?We will wait until the next RBI policy on November 2 before taking a call on our base rate. The real busy season has started now and we have to give good rates to our borrowers in the festive season. I am told that deposit rate growth has also improved. So, there is no immediate requirement for us to increase the base rate and even BPLR.??

MD Mallya,CMD, Bank of Baroda also confirmed that the bank wouldn?t hike rates immediately and would decide in October. Even Canara bank which had said that it would review its lending rates and reconsider its recent discounted festive offers has postponed its decision on lending rates. Executive director HSU Kamath said there was no requirement to hike the lending rates now. ?We will deliberate the issue in October,? he said. MV Tanksale, executive director, Punjab National Bank said the bank may take a call on lending rates early October.

Even private sector major HDFC Bank which take the lead in hiking rates will wait till October end. ?We will decide about our base rate only in October end,?? said executive director Harish Engineer.

?RBI, in its latest review, indicated that interest rates are hardening. However, we will wait for some time before effecting any rate hike,?? said JP Dua, CMD, Allhabad Bank.

S Sridhar, CMD, Central Bank of India explained that either the bank may increase the base rate across the sector or may bring certain changes in the structure of the base rate. ?For example, we may not increase rates in the case of SMEs, but we may do it in the case of mid-corporates.?

In its mid-quarter review, RBI had hiked repo rate ? the rate at which it loans money to banks ? by 25 basis points to 6% and the reverse repo rate ? the rate at which it borrows from banks ? by 50 basis points to 5%.

Almost two months back, all banks had hiked their BPLRs but kept their base rates unchanged to help their old customers to shift to the base rate system.

The bankers have, however, expressed concerns that the credit offtake is not happening as expected. Latest RBI statistics showed credit offtake growing just 20% y-o-y till September. State Bank of India, the country?s largest bank, has reduced its credit offtake target from 21% to 18% for the current fiscal.