Lending Rates raised again

In a surprise move yesterday, ICICI bank has raised its lending rates further, becoming the bank with the highest rate of 13% on Fixed and 11% on floating loans. Though HDFC is lagging behind, it is also expected to move higher by 100bps or a 1% soon. PLR ( Prime Lending Rate ) the reference rate has been left untouched , keeping the existing loans at the same rates as of Feb 6th 2007. Many feel that this move by ICICI is in line with its strategy to slowing down growth in home loan portfolio. Many state owned banks have also raised interest rates for new borrowers and the rates are expected to go further up.

On deposits banks are increasing it further with SBI, ICICI offering upto 9.5% interest as of today. Senior citizens get an additional 0.25% on their deposits generating an annualized yield of 11.75% at 9.75% savings rate.

In other finance developments, Forex reserves of India increased to $190b, creating some more issues for the financeministry. Rupee is being reigned in through various measures by the government but the fact remains that rupee has appreciated against the dollar from 46.9/$ [ when I landed at hyderabad in july] to 43.9/$ [ last week ] and this may continue creating margin pressures for exporters as well as the outsourcing industry.

Disclaimer : I dont claim to be an economist or even some one with formal finance education..