New Delhi: The impact of the Reserve Bank of India’s credit policy 2007-08 is being felt across the board.
As speculated by market analysts, the deposit rates are set to come down, while in all likelihood the interest rates on loans would not come down from the present level.
India's largest private sector bank, ICICI Bank's CMD KV Kamath said the recent move by RBI to hike CRR won’t slow the growth process. However, a reduction in the interest rates on loans is unlikely.
“The Bank doesn't see auto loan rates softening in the next 3 months,” said Kamath.
Spiraling car loan rates continue to dent the passenger car market, as Tata Motors, Hyundai and Honda Motors reported slower sales in July over that in the corresponding month last year.
“We believe that higher interest rates will impact domestic car demand in the first half,’’ said a Mumbai-based analyst. “However, the medium-term prospects look positive for passenger car sales, driven by rising disposable incomes and aspiration levels of the target customer,” the analyst was quoted by moneycontrol.com.
At present the car loan rates are hovering between 12-14 per cent. And most of the car buyers are sticking to cash deals rather than carrying the burden of long-term EMIs.
Lenders have also quietly increased processing charges for car loans. "Earlier we used to charge 1.5 per cent as processing fee, but now we have been told by ICICI Bank that the same would be 2 per cent," ICICI Bank's direct selling agency says.
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