Lending rates goes up and up!!
The sustained fall of rupee has begun to impact banks. Major Banks has begun to raise lending rates, which means people planning on Home loans, auto loans and festival loans will have to do a rethink.
Monday’s hands off approach by the RBI is in sharp contrast to the raft of measures taken by it to shore up the currency, including partial capital controls announced a day before Independence Day. From Friday’s opening of 61.35, the rupee went all the way up to 63.30 on Monday before closing at 63.13 to a dollar and has breached 64 rupee mark on tuesday.
Since July 15, the RBI has taken steps at regular intervals to keep the rupee stable but could not contain the galloping speed of the rupee against dollar making it the worst performing Asian currency.
The falling rupee has begun to raise the cost of lending by banks. The minimum rate at which it offers loans to individuals and corporates by 25 basis points, to 10.25 per cent. Home and auto loans will now be costlier — bad news for the economy and borrowers.