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Banks, HFCs holding back rate cut

Banks, HFCs holding back rate cut

Apnaloan.com Research Bureau

09 May 2008

Following the Reserve Bank of India's annual credit policy meeting on April 29, it was widely expected that banks and lenders will reduce interest rates on home loans.

Contrary to the expectations, the housing finance companies (HFCs) and banks such as ICICI Bank, HDFC and State Bank of India do not forsee a fall in the lending rates on home loans. The expected decrease is said to have not come the consumers way due to the rising inflation and borrowing costs.

According to RBI, though the risk weight for home loans between Rs. 20 lakh and Rs. 30 lakh has been reduced to 50 per cent, the benefit for banks seem to be have neutralised by the hike in the cash reserve ratio (CRR) to 8.25 per cent.

Following the hike, the banks hold on to the interest rate hike, as of now.