Mumbai

Axis bank, others hike interest rates on loans

 

With the Reserve Bank of India (RBI) raising key interest rates in its monetary policy, it was quite expected that other banks will follow suit. On Monday, Axis Bank raised its one-year marginal cost of lending rate (MCLR) to 8.6% from 8.5% earlier. Syndicate Bank too revised its MCLR and raised rates for the one-year tenor by 5 basis points (100bps = 1 percentage point) to 8.55%, keeping all other rates unchanged. 

 

Last weekend state-owned Andhra Bank also increased the MCLR-based lending rate by 5bps to 8.55% for various tenors. IDBI Bank meanwhile hiked interest rates on term deposits that will be effective from June 18, 2018. The bank now offers a return of 6.7% on deposits from one year to two years as against 6.5% earlier.

 

Given the rise in interest rates following bank credit growth outstripping deposits, several non-banking finance companies (NBFCs) like Bajaj Finance have increased rates on deposits. According to rating agency ICRA retail focussed NBFCs would require about Rs. 3.8-4.0 lakh crore of fresh debt funding during FY2019 to support their envisaged portfolio growth of about 20% in FY2019. The accompanying incremental weighted average funding cost is expected to be about 9.3-9.5% as against 8.4%-8.5% in FY2018.
 

Written by The Realty Paper


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