Reserve Bank of India has raised policy rates further by 25 basis points in order to check towering inflation figures. However, bankers have responded to the rise saying that it is not imperative that there would be a immediate corresponding rise in home, auto and corporate loans.
"The transmission mechanism between RBI and rest of the financial system does not work very fast. It always works with a time lag," said SBI Chairman O P Bhatt.
"So, whether it (hike by RBI) will raise pressure on the system. Eventually, it will. Whether there would be immediate reaction. Not likely," he said.
"There would be some banks who would be thinking of raising rates, it would be kicker for them. For other banks it may not be so. So there would be mixed reaction," he added.
With rise in policy rates, repo rate now stands at 6.25% and reverse repo rate is 5.25%.
Indian Bank Executive Director V Ramagopal said that if there is further tightening of liquidity and rise in credit offtake, interest rates would certainly rise.
Oriental Bank of Commerce Executive Director S C Sinha said, "I don't think there would be increase in interest rates as RBI move was already discounted."