HDFC Bank's deposit rates may go up by 100 bps

New Delhi: The country's second largest private sector lender, HDFC Bank, has decided to hike fixed deposit rates by up to 100 basis points and lending rates by 50 basis points in line with industry trend.

Deposit rates across select maturities will be revised upward from 25-100 basis points effective tomorrow, sources said.

Similarly, base rate or the minimum lending rate would go up by 50 basis points to 8.7 per cent. This is the second hike in less than 20 days.

The Mumbai-based bank last raised its base rate by 45 basis point to 8.2 per cent on February 24.

With the hike in base rate, all kinds of loans, including auto loan for new borrowers, will become expensive by at least 50 basis points.

Fixed deposits below Rs. 15 lakh with maturity between 46-90 days will earn 5 per cent interest rate, up by 100 basis points, highest increase among all the maturity slabs.

Interest rate for term deposits between 61-90 days will go up by 50 basis points to 5.5 per cent from the prevailing 5 per cent interest rate, while maturity slab of 6 months 1 days to 6 months 15 days will give 6.75 per cent, 75 basis points higher than the existing rate.

At the same time, the interest rate of fixed deposits with the tenor of 366-380 days has been increased by 25 basis points to 8.25 per cent while 2 years 17 days to 3 years term deposit to earn 8.5 per cent, an increase of 0.25 per cent.

Most of the increase is in the short term duration slabs of up to 2 years much in line with other lenders.

The bank last revised fixed deposit rates on January 4, before the third quarter review of credit policy in the last week of January.

Banks have been raising interest rates following a 25 basis point hike in short-term lending (repo) and borrowing (reverse repo) rates announced by the Reserve Bank in its third quarterly review of monetary policy on January 25.

Meanwhile, HDFC Bank has also decided to increase its Benchmark Prime Lending Rate (BPLR) by 75 basis points to 17.25 per cent effective March 14.

This will make all kind of existing floating loans expensive by atleast 75 basis points resulting in higher installment amount.

Last month, country's largest lender SBI raised lending and deposit rates on select maturities by 25 basis points in response to policy rate hike announced by the Reserve Bank in January.

Besides, SBI revised the base rate by 25 basis points to 8.25 per cent.

Source: Financial Express

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Bulk deposit rates to ease from April: SBI official

The interest rates on big-ticket deposits may ease from April on the back of improvement in liquidity and fall in credit demand during early months of financial year 2011-12, according to a State Bank of India (SBI) official.

With tight liquidity, banks have raised substantial amount through certificate of deposits and short-term bulk deposits by offering high interest rates. The short-term deposit rates for bulk deposits have ruled above 10 per cent.

Short-term interest rates have remained stable for the last few days. If the credit growth does not show frenzy (around close of financial year 2010-11), rates will not rise. The credit off-take is slow in the beginning of the new financial year and deposit rates may ease from April, SBI Managing Director, R Sridharan, told reporters on the sidelines of a convention on financial regulations.

The pace of deposit growth has lagged credit growth, putting strain on resources. Banks have raised deposit rates across maturities by at least 200 basis points via three-four rounds to attract funds from retail and institutional clients.

According to the Reserve Bank of India data, commercial banks raised Rs 5,91,026 crore till February-end in financial year 2010-11. The pace of deposit growth improved to 13.2 per cent by February-end, as against10.2 per cent in October-end last year.

Source: Business Standard

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No collateral for loans to SC/ST: FM

New Delhi: The government today said the provision of collateral security for getting loans from banks has been waived for Scheduled Castes and Scheduled Tribes (SC/ST) as part of measures to grant them easier access to credit.

"There is no need for collateral security for these sections for getting bank loans," Finance Minister Pranab Mukherjee told the Lok Sabha while replying to supplementaries during the Question Hour.

He said banks should not insist on deposits while considering loan applications under government sponsored poverty alleviation schemes/self-employment programmes from borrowers of these (SC/ST) communities.

In case of rejection of loan applications of SC/ST, it should be done at the next higher level instead of at the branch level indicating proper reasons for rejection, he said.

Mukherjee said banks have been asked to create greater awareness among SC/STs in order to encourage them to access credit facilities.

"Field staff should contact such borrowers to explain schemes and their advantages," he said.

Source: Financial Express

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Indian cos raise $8.3 bn through IPOs

New Delhi: Indian Inc mopped up a whopping USD 8.3 billion through initial public offers in 2010, fourth largest in the world, according to Ernst & Young.

Global consultancy E&Y's data shows the amount is more than double the amount mopped up in 2009. In 2009, the figure stood at USD 4.1 billion.

The entities were helped by a robust stock market.

"In terms of the number of IPOs, India, ranked sixth globally and saw an increase of 215 per cent from 20 IPO deals in 2009 to 63 in 2010," E&Y said.

The average deal size stood at USD 132.5 million as compared USD 203.4 million in 2009.

"Driving industrial IPO activity is India's investment plan to modernise its infrastructure worth USD 1 trillion. This programme has led to many new listings in the energy and power, natural resources, building and construction sectors," E&Y noted.

Country's largest coal producer Coal India's IPO had raked in a staggering USD 3.4 billion in October last year.

E&Y India's Partner and IPO Leader R Balachander said India's IPO markets continue their dramatic recovery.

"Globally, although the first two months in 2011 has seen a good start, the current upward trajectory may not necessarily be smooth as global macroeconomic risks could yield further market volatility.

"However, barring another unforeseeable crisis, 2011 global IPO markets are expected to be stronger than in 2010," Balachander added.

Source: Financial Express

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RBI seen raising repo rate by 25 bps

MUMBAI: A sluggish industrial output growth and the feared fallout of the political turmoil in West Asia and North Africa and the devastating earthquake in Japan on the Indian economy are likely to play on the Reserve Bank of India?s mind while it continues with its ?struggle? to combat its chief prey ? inflation ? through hiking policy rates and curbing demand.

The central bank would most likely hike repo rate by 25 basis points at its forthcoming mid-quarter monetary policy review on March 17, a poll of economists, bankers, and bond dealers conducted by ET showed. One basis point is one-hundredth of a percentage point. Repo rate is the rate at which the RBI lends to banks against securities.

Last year was the most action-packed for the Indian financial market this decade in terms of policy actions. The RBI raised policy rates seven times since March 2010 with a hike of 175 basis points in repo rate and 225 basis points in reverse repo rate.

Admitting that the central bank is struggling in its dual objective of taming inflation and promoting growth, Governor D Subbarao had recently said, ?For inflation management we have to raise policy interest rates. For protecting, promoting, and preserving recovery we need to keep interest rates low, so there is tension between raising policy interest rates and keeping them low.?

Indicating more rate actions from the RBI, the finance ministry?s Chief Economic Advisor Kaushik Basu said policy initiatives to bring down inflation will continue a couple of months into the new fiscal year. Government data released last week showed food inflation for the week to February 26 slowed to a three-month low of 9.52% year-on-year. This compares with a 10.39% increase in the previous week. Annual headline inflation in January was at 8.23%, well above the RBI?s perceived comfort zone of 4-5% and compared with its March-end target of 7%. Government data due on March 14 is expected to show February headline inflation to have moderated to around 7.8%.

However, some, such as State Bank of India , don?t see any rate action from the RBI at its mid-quarter review and expect it to be a non-event. ?Inflation is coming down and industrial production is slow. Rising oil prices and the crisis in Japan ? all these factors might affect our growth in some way. So we don?t expect any changes in interest rates this time. Even if there is a 25-bps rate hike, it will not substantially affect the secondary interest rates,? said Anjan Barua, deputy managing director & group executive (global markets), State Bank of India. India?s Index of Industrial Production rose 3.7% in January, marginally higher than the 2.53% rise a month earlier, which many experts feel may not be adequate to meet the 8.6% GDP growth target for the fiscal year-end.

Raising concerns that domestic demand growth is likely to slow, brokerages such as Citi and Morgan Stanley recently scaled down their GDP growth forecast for India to 8.4% and 7.7%, respectively, for the next fiscal year. In comparison, the government in its Budget last month said the economy is expected to grow at 9%, plus or minus 0.25%, in 2011-12.

Source: EconomicTimes

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