Loans from HDFC Bank to go expensive very soon

The second largest private lender in the country HDFC Bank has announced to raise the lending rates soon. The announcement was made a couple of days after the Central Bank raised the repo and Reverse Repo Rates by 25 basis points.

Executive Director of the bank Mr Paresh Sukthankar said "There will be an increase in lending rate, both in retail and corporate side. Most retail products, including auto loans, will see an increase in the next few days."

After the increment the Repo Rate is 6.5 percent and the Reverse Repo Rate is 5.5 percent.
Mr Sukthankar further said "Higher ticket loans will attract higher EMIs as lending rate increase. This will lower retail demand for higher level loans."

Earlier the bank also raised the deposit rates across various maturities, effective from January 1,2011.

State Bank of Mysore raises BPLR rate by 25 points

State Bank of Mysore has announced to raise the Benchmark Prime Lending Rate of the bank by 25 basis points to 13.50 percent. The new rates will come into effect from today itself. State Bank of Mysore is subsidiary bank of State Bank of India.

The BPLR is used for determining interest rates on loans and advances sanctioned up to June 30, 2010. For the loans that were sanctioned after 30^th June , base rate is applicable.

Recently several other banks like ICICI , State Bank of Travancore , Kotak Mahindra Bank and Dhanlakshmi bank raised their BPLR rates .

Loans to go 1% more expensive this year

The Indian economy is currently expanding at the rate of 9 percent per annum but still the liquidity condition remains tight. It is expected that banks can increase their lending rates by at least 1 percent in the year 2011.

Chairman and Managing Director of Canara Bank, Mr S. Raman said, “Interest rates have not yet peaked, Rates may go up if liquidity remains tight and demand for loans increases.”

During the last year the credit growth was much faster than that of deposit rate. RBI was expecting a growth of 20 percent in the credit during the Year but it grew with 23.7 percent while the deposit showed only 14.7 percent growth.

On Friday, ICICI bank and State Bank of India raised their lending rates. Almost all the banks have raised their lending rates to 9 percent in the recent weeks.

Mr K R Kamath CMD of Punjab National Bank said “So long as there is pressure on liquidity, pressure on margins will continue,Also, there will be resistance among borrowers to absorb a hike in lending rates, but if deposits do not grow in turn with credit growth, banks will need to attract depositors by offering higher rates keeping inflation in mind.”

Inflation showed signs of rest for a few months, but it is again on a high. The food prices are increasing at record rate.

Hemant Mishra, head of global markets Standard Chartered said, “RBI is likely to continue with (its) tight liquidity stand to ensure efficient transmission of monetary policy. However, we do expect liquidity deficit level to come off to Rs 50,000-60,000 crore once demand and supply gap normalises”.

Loan beyond 80% of home value, not possible!!!

Reserve bank of India (RBI) has introduced new guidelines for home loans. The central bank has made it tougher for property loan valuing more than 75 lac.

The RBI has said that the banks can provide loan only 80 percent of the cost of property, rest 20 percent has to be necessarily arranged by the borrower. These new guidelines are introduced by the bank, considering the excessive flow of money from the banks in real estate sector.

According to a notification issued by RBI "In order to prevent excessive leveraging, the LTV (Loan to Value) ratio in respect of housing loan hereafter should not exceed 80 per cent," however the central bank said that the banks can provide upto 90 pecent loan to small housing loan upto 20 lacs.

Reacting to the revised policy, some banks like ICICI and HDFC have already withdrawn their teaser rate scheme while SBI will follow the renewed guidelines from next month.

LICHF says all loan approval norms duly followed

Central Bureau of Investigation arrested many top officials of financial services firms as well as public sector banks yesterday in pertanance to the housing finance scam. Amongst them was CEO of LIC housing finance (LICHF), Ramachandran Nair .

"All procedures and due diligence consistent with board approved guidelines have been adhered to in approving the loans, as has been followed in the past, by the competent authority," LIC Housing Finance said clarifying its stand.

Other than Nair, the arrested officials include Naresh K Chopra, Secretary (Investment), LIC, R N Tayal, General Manager of Bank of India (Delhi), Maninder Singh Johar, Director (Chartered Accountant) of Central Bank of India, Venkoba Gujjal and Deputy General Manager of Punjab National Bank (Delhi).

CBI also said that it has arrested Rajesh Sharma, CMD of Mumbai-based firm Money Matters Ltd and two of its employees -- Suresh Gattani and Sanjay Sharma.

LIC Housing Finance said, "All the loans are secured by the underlying assets to the full satisfaction of the approving authority. All the loans have been approved with relevant regulatory norms."

"As on date all the loans in question are performing assets," added LICHF.

CBI spokesperson R K Gaur commented on the issue saying that, "Officers of top management and middle management of various public sector banks and financial institutions viz. BoI, Central Bank of India, PNB, LIC and LICHF were receiving illegal gratifications from the private financial services company who were acting as mediators and facilitators for corporate loans and other facilities from financial institutions."

"They were also gathering confidential business information from financial institutions," added Gaur.

IDBI Bank and State Bank of Mysore raised lending rates

IDBI Bank and State Bank of Mysore have raised lending interest rates.

IDBI Bank is the first bank to raise its interest rates after the Reserve Bank of India (RBI) raised key policy rates by 25 basis points. The bank has raised its term deposit rates by 10-50 basis points across maturities to attract customers.

Bank has also revised its benchmark prime lending rate by 25 basis points to 13.5%. The new rates are effective from November 4.

IDBI Bank Chairman and Managing Director R M Malla said RBI has pointed to the issue of negative returns on deposits. He added, bank is willing to give better returns to small depositors.

State Bank of Mysore has raised its base rate by 25 basis points to 8%. According to bank statement, the revised rate has come into effect from November 1.

Central Bank to provide loan to rickshaw pullers

Central Bank of India will be providing finance for rickshaw pullers. Bank CMD S Sridhar will launch a rickshaw finance program in Uttar Pradesh capital on November 9.

Through this program the aegis of Rickshaw Federation plans to provide loans to rickshaw pullers to own their rickshaw units and thereby bringing them under the formal banking system. Sridhar will meet the state government officials regarding this.