“Most of our retail loans, especially the entire vehicle loans, are fixed rate. The floating loan portfolio is not more than Rs 9-10,000 crore for us. CD rates are a better benchmark for us,” said Romesh Sobti, managing director and CEO of IndusInd Bank in the press meet on Thursday.
Other private banks
had initially opposed linking their lending rates to repo, saying repo rate was volatile, but RBI
mandated every bank to link their floating rate to an external benchmark, repo being one of them. However, State Bank of India (SBI) had in May linked its home loan to repo, much before the RBI
came up with the mandate.
are asking the RBI
to make it mandatory to link deposit rates to external benchmark as well. They themselves don’t want to do it, but it would be easy if the regulator mandates it.
However, the regulator is in no mood to do so.
“Banks have enough flexibility in their existing deposit structure to allow such flexible retail loans. The RBI doesn’t see a reason to make deposit rates floating too, especially as not the entire lending book of banks is floating,” said a person familiar with RBI thinking.