RBI today hiked the repo rate by 0.25% . This is unlikely to hurt banks lending in normal capacity. However, if banks overstretch, then they have to borrow from RBI which will be 0.25% higher.In the monetary policy review today, RBI raised the repo rate, the rate at which it lends to banks, by 25 bps to 7.25% while keeping the reverse repo, the rate at which it borrows from banks, unchanged at 6%.
"Banks having liquidity problems may charge a higher price for Personal, Real Estate and Equity Market loans," Allen Pereira, executive director of Oriental Bank of Commerce, told PTI.
K Raghuraman, executive director of Punjab National Bank, said RBI's repo rate hike is a caution on credit growth, specially for banks who are aggressive in the market.
The Land Sharks of corporate India will find it tough to borrow for their shady Land Bank deals. Good Job Done, Dr Y V Reddy! We don't want a Japan like situation in India where the collapse of the Japanese Real Estate market led to the collapse of their Banking System and then their entire economy in 90s.
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