Loans to get expensive

Posted by Jack Macferson | 8:48 PM | | 0 comments »

Personal and Real Estate Loans as well as credit card withdrawals may become expensive, with RBI on Wednesday asking banks to set aside more money to cover risks on advances to these sectors while raising key short-term lending rates to curb inflation.

While borrowing for buying shares too could become costlier, housing loans may not be impacted as they are not touched by the measures announced by RBI in the third quarter review of monetary policy. In the review, RBI increased provisioning requirement for the four sectors to two per cent. It means that banks now have to keep two paise for every rupee given to these sectors. A hike in this rate is aimed at increasing the cost of retail and housing loans to prevent overheating in these rapidly growing sectors.