Banks not to increase loan rates

If you have an outstanding home loan, car loan or personal loan, you can breathe a little easy, for now. Although the Reserve Bank of India raised key policy rates on Tuesday in a bid to control rising prices, banks have ruled out immediate hikes in lending and deposit rates. However, in the medium term — which is three to four months — all these rates are expected to go up as the economy grows and credit growth picks up.

The RBI on Tuesday hiked the repo and reverse repo rates — the rates at which banks borrow money from it and vice versa — by a quarter per cent and a half per cent respectively. This is the fourth such hike in 2010. Higher rates are a part of the RBI’s monetary policy to control rising prices. In its latest credit policy, the RBI has clearly identified rising prices as the biggest worry.