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Interest rates set to harden: BankersPosted online: Tuesday , July 29, 2008

Bankers on Tuesday said both lending and deposit rates are likely to go up by a minimum of 0.5 per cent, as a fall out of Reserve Bank announcing a hike in short-term lending rate and cash reserve requirement of banks.

"We have to assess what is the actual impact and a decision would be taken accordingly. A minimum 0.5 per cent hike in our BPLR and deposit rates cannot be ruled out," state-owned Punjab National Bank's Chairman and Managing Director K C Chakarabarty said in Mumbai.

Announcing the quarterly review of credit policy, RBI hiked CRR by 0.25 per cent to 9 per cent and Repo by 0.5 per cent to 9 per cent.

Union Bank of India's Chirman and Managing Director M V Nair said the bank's Asset Liability Committee (ALCO) would look at the liquidity condition of the bank after the hike.

The lender is likely to up its BPLR, Nair said, but did not say what would be the range of revision. "Our ALCO will meet soon to assess the impact. There is a clear pressure on the profitability of banks after the present hikes in RBI key-rates. We may revise our BPLR upwards," Nair said.