The Hindu : Business : ICICI Bank raises deposit, lending rates

Online edition of India's National Newspaper
Wednesday, Nov 17, 2004

Business

Business

ICICI Bank raises deposit, lending rates

By Our Special Correspondent

MUMBAI, NOV. 16. ICICI Bank has increased the deposit (across select tenors) and lending rates by 0.25 to 0.75 percentage points with effect from November 17.

The Floating Reference Rate (FRR), which is used for determining the rate of interest for adjustable (floating) rate home loans, has been increased by 0.50 percentage point. The increase in FRR will be applicable to new customers from November 17.

For existing customers, the increase in FRR by 0.50 percentage point will be effective from January 1, 2005 in line with the bank's policy of resetting rates on a quarterly basis. Interest rates on fixed rate home loans have been increased by 0.75 percentage point to 8.50 per cent from the current level of 7.75 per cent.

The existing fixed rate home loan customers will not be impacted by this increase ad their contracted rates will remain unchanged.

The bank has also announced an increase of 0.50 percentage point in the ICICI bank Benchmark Advance Rate (I-BAR), which is used for determining the rate of interest on new loans and advances (other than the categories of loans to individuals and specific agencies as advised by Indian Banks' Association). Accordingly, I-BAR will be 10.50 per cent with effect from November 17.

The new domestic term deposit rates are: 15 days and above up to 45 days, 3 per cent; 46 days and above up to 60 days, 3.25 per cent; 61 days and above up to 90 days, 3.50 per cent; 91 days and above up to 180 days, 4.50 per cent; 181 days and above up to one year, 5 per cent; more than one year up to three years, 5.50 per cent; more than three years up to five years, 5.75 per cent; more than five years up to ten years, 6.25 per cent.

Central Bank of India had raised the interest rates on domestic term deposits by 0.25 to 0.75 percentage points across various maturities on November 13.

Canara Bank also raised the interest rates on domestic term deposits by 25 basis points with effect from November 15.

The move is in line with the trends as the market interest rates across various maturities increasing during the current financial year. The 91-day Treasury Bill cut-off yield has moved up by about 1.20 percentage point and the yield on the benchmark 10-year Government of India Securities (G-Sec) has moved up by about 2 percentage points since March 31, 2004.

Further giving an indication to markets that the interest rates are firming up, the Reserve Bank of India increased the cash reserve ratio (CRR) by 0.50 percentage point in September and followed this monetary tightening measure with an increase of 0.25 percentage point in the reverse repo rate (a short-term indicative rate) from 4.50 to 4.75 per cent.

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