Corporate loans get costlier by 0.25-0.5 pc

Corporates have to to shell out 0.25-0.5 per cent more toward interest on loans, as top lenders like State Bank of India, Bank of Baroda and Punjab National Bank have hiked Prime Lending Rates along with retail loan rates.

SBI and PNB have increased their PLRs by 0.25 per cent each to 11 per cent and 11.5 per cent respectively while BOB has increased PLR by 0.5 per cent to 11.5 per cent.

"Lending rate is likely to go up by 0.25 per cent for customers, who were earlier getting loans at sub-PLR," PNB Executive Director K Raghuraman told PTI.

Like many banks, PNB also lends to big corporate houses and those with good rating at sub-PLR, starting from 9 per cent interest, to attract their business.

After 0.25 per cent hike, PNB's BPLR rose to 11.5 per cent from 11.25 per cent. So, its lending rates to corporates has gone up to 9-11.5 per cent from 9-11.25 per cent.

With interest rates hardening after Reserve Bank raised short term rates twice by 0.25 per cent each in two months, most of the banks want to negotiate better rates within PLR as corporates are making good profit, say bankers.

Fearing slow down in credit offtake, many banks may take into factors like a company's rating before hiking rates.

That means, besides sub-PLR borrowers, companies with low rating may have to pay a little more.

However, bankers say the hike is unlikely to slowdown industrial credit off-take.

"I do not see any major impact as credit growth is at a higer level than projected," Bank of Maharashtra chairman M Mallya said. Another banker said companies will pass the increase in interest cost to end users in the long run.

Article Source: http://www.share.onlypunjab.com

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