Mumbai, January 29: ICICI has hiked its short-term prime lending rate for loans upto one year by 200 basis points to 14 per cent -- 50 basis points higher than the minimum short-term prime rate offered by the Industrial Development Bank of India (IDBI) and the Industrial Finance Corporation of India (IFCI).The second largest term-lending institution has also raised the medium-term prime rate (one to three years) by a similar magnitude to 14.25 per cent.
The long-term prime rate (beyond three years) is up to 14.50 per cent-a smaller rise of 100 basis points. The new rates will come into effect from January 19.
"Interest rates are volatile and the consensus is that the rise in rates is mainly in the short term. As a result our short-term product and the medium term rate, which is linked to the bank rate, have been hiked by 200 basis points", ICICI general manager Kalpana Morparia said.
"Our short-term borrowers will not be effected as the interest rate will be reset annually," Morparia said. An ICICIpress release says: "Given the general consensus that the increase in interest rates is temporary in nature, the upward revision in the long-term prime rate has been comparatively lower". Currently, ICICI has the highest short-term rate among institutions. Both IDBI and IFCI had hiked their rates by one per cent to 13.5 per cent last week. ICICI saidas a result of RBI's decision to tighten liquidity, the borrowing costs of the organisation were expected to go up, necessitating a consequent rise in the lending rates.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
