Winning Bizness Desk

Mumbai. Home, personal and auto loans have become costlier during the festive season as SBI, Kotak Bank and Federal Bank have increased the MCLR. However, some banks, including SBI, had said a few days ago that they have cut their interest rates by up to 0.30 per cent during the festive season. Bank of Maharashtra MD A.S. Rajeev said such rate hikes will not have much impact on loans during the festive season. RBI has increased the repo rate by 1.90 per cent since May prompting banks to make loans expensive. There is a apprehension that in the December meeting, once again the RBI may increase the repo rate, due to which people will have to pay more installments for the fifth time.

MCLR rates going up

SBI has increased the one-year MCLR by 0.25 per cent to 7.95 per cent. The rate of MCLR for two to three years has now gone up to 8.15 per cent and 8.25 per cent. It was earlier at 7.90 and 8 per cent. This rate has come into effect from October 15. However, the bank had said a few days ago that it has cut its interest rates by up to 0.30 per cent during the festive season. Kotak Mahindra Bank said that it has reduced the Marginal Cost Lending Rate (MCLR) for all tenors in the range of 7.70 to 8.95 per cent. The one-year MCLR will now be 8.75 per cent. Federal Bank said that its one-year MCLR will now be 8.70 per cent. The new rates of both have been implemented from October 16. The demand for loans is expected to pick up with the purchases during the festive season. Industry body CAIT claims that around Rs 2.5 lakh crore purchases will be made during this period. In such a situation, banks can withdraw money on a large scale, in view of which banks had already increased the interest rate on FD, so that there is no problem of liquidity.

Union Bank hikes interest on FD

Union Bank has now increased the interest on FD to 7 percent. The bank said that the new rate would be applicable from October 17. From 91 days to 180 days, now 0.20 percent more will get 4.10 percent interest. One year FD will get 6.30 percent interest, which was 5.35 percent earlier. Interest of 6.60 per cent will be available on FD of one year to 443 days while 7 per cent interest will be available on FD of 599 days. The interest on FDs of 5-10 years is 6.70 percent. According to RBI data, in September this year, the lending of banks has shown a growth of 16 per cent, which is a record of the last 10 years. With festivals like Diwali and Dhanteras now in October, further lift in debt is expected.