New Delhi: The days of cheap interest rates are over. Banks have started increasing the rates of loans. Recently, Axis Bank hiked the loan rates by 0.05 per cent and raised it to 8.30 per cent. The bank has increased loan rates after 3 years. Apart from this, Kotak Mahindra Bank, IndusInd Bank, and Yes Bank have also increased rates in January. These banks have increased the rate of MCLR from 0.05 to 0.10 per cent, which has come into effect from January. This increases your home loan and auto loan’s EMI.
More investment on Deposit:
Banks have increased the rates because they have to pay more on deposits. Banks have implemented marginal cost of funding (MCLR) systems from April 2016. The rates of loan will continue to grow in the short term. Kotak Mahindra Bank’s Joint MD Deepak Gupta said that the deposit has increased 0.5 percent. The Reserve Bank has also indicated that rates will not be further cut and it seems that the rates of banks will not be cut.
Inflation at 6-month high:
The Reserve Bank’s monetary policy came on December 6 in which there was no change in interest rates. The Reserve Bank took this decision after going to the inflation level of 6 months.
