RBI ups short-term rates; tightens noose on home loans
Mumbai, Nov 2 (PTI) Aimed at taming inflation, the Reserve Bank today raised key short-term lending and borrowing rates by 25 basis points, but the move may not lead banks to hike commercial interest rates immediately.
The Central Bank also tightened norms for housing loans to check asset bubble, and possible defaults.
However, banks may not be able to hold on to existing interest rates for long as demand for credit increases and depositors put pressure on them to raise interest rates.
To keep enough liquidity in the market, the RBI refrained from raising cash reserve ratio, the amount that banks keep in cash with the central bank, to ensure that economic growth is not strangulated due to paucity of funds.