What the new credit policy means for you Livemint
In its annual credit policy announced on Monday, the Reserve Bank of India (RBI) increased key policy rates, but has given no reason for you to worry, at least in the near future.
RBI has raised the repo rate, the reverse repo rate and the cash reserve ratio by 25 basis points each. Typically, a hike in bank rates means tightening of liquidity which may translate into hardening of interest rates. One basis point is one-hundredth of a percentage point.
However, leading bankers say that the current hike will have no immediate effect on lending rates, but do not rule out an increase in the future. Romesh Sobti, managing director and CEO, IndusInd Bank Ltd, says, “At this point, we see there are no compelling reasons to hike interest rates.”
Where will rates go
Graphic: Paras Jain / Mint
Bankers expect interest rates to go up in a few months.H.S. Upendra Kamath, executive director, Canara Bank, says: “There will be no immediate effect in the interest rates, but the hike is inevitable. If credit growth picks up briskly, we will see a hike in rates in one to two months.”