The country's largest private sector lender ICICI Bank jacked up auto loans by up to 0.75 per cent even before the RBI decided to increase statutory deposits last week as a part of inflation controlling measure. "Rates have increased in between 50-75 basis points for certain segment of auto loans from the first week of April," ICICI Bank group business (head) vehicle loans N R Narayanan told PTI. "The decision to increase auto loan was taken in March, but we kept it on hold till the beginning of the new fiscal," he said. Auto loan prior to the hike, he said, was in the range of 13.5-14 per cent, which has gone up by 0.75 per cent during the month. ICICI Bank, going forward, could further revise rates depending on the market condition and competition. The decision on interest rates would depend on how competitors behave. "You have to take all this into account before you do any rate adjustment," he had said last week. "We will see as we go along. We are all working in a market place. We have to understand market. For that we need next few days..." he added. Last week, the Reserve Bank (RBI) hiked cash reserve ratio, the amount of depositors' money that banks need to park with it, by half a per cent to tighten money supply. The hike, which would take CRR to 8 per cent, will impound Rs 18,500 crore from the banking system leading to reduction in the margins of the banks. As ICICI Bank is the largest player the the auto loan market, its decision to raise the interest rates would have bearing on the industry. When asked about reason for the hike, the ICICI Bank spokesperson said the decision is taken based on cost of fund and operating expenses. Loans on two-wheeler have been increased by half a percentage point, he added. Commenting on hardening of interest rates, Hero Honda's managing director Pawan Munjal said, as such two-wheeler industry has been struggling, the recent hike will have negative impact. "But the RBI and government are looking at the macro picture but we ar looking at our own industry," he said.
