RBI rates may turn auto, home loans expensive

Jul 27, 2010 |

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Mumbai, July 27: Targeting to check the double digit inflation, RBI today hiked its short-term lending and borrowing rates by 0.25 per cent and 0.50 per cent respectively, a move that could put pressure on banks to make auto, home and commercial loans expensive.

Although Finance Minister Pranab Mukherjee said the steps announced by the Reserve Bank will check inflation without hurting growth, bankers and the industry fear that the initiatives will put pressure on interest rates.

In its first quarterly review of the monetary policy, RBI today increased the short-term lending rate (repo) to 5.75 per cent and short-term borrowing rate (reverse repo) to 4.50 per cent with immediate effect.

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