SBI not to hike interest rates for now

SBI not to hike interest rates for nowRBI hiked the cash reserve ratio by 75 basis points but the increase in overall credit was still moving at snail's pace. Keeping this in mind, India's largest lender State Bank of India (SBI) announced on Monday that the lending rates would not be changed much and would largely remain stable for the coming 5-6 months.

There are now enough liquidity ratios in the system and the credit offtake is still slow thus the home loan rates are to remain stable for some time. SBI had given teaser home loan rates earlier this year to which the central bank had expressed concern.

The authorities feel that once the interest rates go up it would be tough to repay the home loans. 'Teaser' rates are referred to as rates when the interest rate of the loan is low for the first few years, which increases later during the term of loan. SBI had offered such loans.

The repayment capacity of the borrowers is first tested before the loan is given to them. The banks follow the KYC (know your customer) norms to assess these. The base rate that SBI has proposed is 8%.