Loans set to get costlier
Interest rates across various categories of loans are likely to rise by 50 basis points as banks are set to hike lending rates following the Reserve Bank of India’s (RBI) decision to hike the cash reserve ratio and the repo rate by 50 basis points each. Though the RBI had raised the repo rate by 25 basis points on June 11, most banks, barring some private sector entities such as HDFC Bank and IndusInd Bank, did not alter their lending rates. “However, this time around, a revision in interest rates is imminent. Our bank will shortly take a decision,” said an official from Punjab National Bank. Another banker said that interest rates on loans were likely to turn dearer by at least 50 basis points and in some categories, the rise could even be to the tune of 75 basis points. He added that deposit rates could also be hiked in the coming days. “Many banks had not hiked their lending rates when the RBI last raised the repo rate. Therefore, if one were to take into account today’s move, there could be at least half a percentage point increase in loans,” he said. Indian companies are likely to bear the brunt first as banks will be keen to raise their prime lending rates. Though home loan rates are also expected to rise, it is felt that they will be increased only towards the end of this month and that the increase could be in the region of 25-50 basis points. Stock market observers, stunned by RBI’s late evening announcement, said the move would hit sentiments tomorrow and that interest rate sensitive scrips could be the worst hit. There are fears that the sensex will open lower over expectations of company earnings taking a hit because of the RBI’s frequent rate manoeuvres. |
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The second Ambani slugfest in the courtrooms is likely to start tomorrow. Reliance Communications (R-Com) is preparing to file a writ petition in Bombay High Court on Friday against some officials of Mukesh Ambani-owned Reliance Industries Ltd (RIL) accusing them of “criminal breach of trust and fraudulent misuse of powers” in signing and executing a set of agreements on January 12, 2006. These agreements laid down the terms under which the two brothers would stay out of each other’s turf for a period of 10 years. These subsidiary agreements were linked to the process of demerger of the Reliance empire that occurred in January 2006. R-Com officials said several RIL officials, including L.V. Merchant, Sandeep Tandon, and K. Sethuraman, would be charged with “criminal conspiracy and abetment to cause wrongful harm to the two million shareholders of Reliance Communications and the ADA group.” These officials were the signatories to the non-competition agreement and the trademark management agreement between RIL and the four demerged entities that eventually went to Anil Ambani. Sources in the ADAG said R-Com would primarily challenge the procedure followed by RIL in signing the “non-compete agreement”. According to officials, the agreement was signed in a one-sided manner by Mukesh Ambani's men when R-Com was still under Mukesh's control. The company was transferred to the ADA group only on February 7, 2006. Sources in RIL said they would wait for Anil Ambani’s camp to file the petition and then decide on their response. This will be the second legal battle since the demerger. |
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