Union Bank of India (UBI) board will meet next week to take a call on raising prime lending rates (PLR), that could rise by 25-50 basis points, while the bank hoped that this should not impact the demand for housing loans among the first time buyers.
UBI made advances of around Rs 8000 crore towards housing loans last fiscal and the portfolio had grown by 20 per cent on a year-on-year basis. Raising interest rates could impact consumer loans, but we do not see an immediate slow down in the housing loan offtake, said R S Reddy, executive director, UBI.
It could, however, affect investors who looked at real estate as an investement option, he added. UBI would focus on lendings to the small and medium enterprises(SME) sector as well as retail. Most banks would now have to moderate their credit growth taking cue from the Reserve Bank's signals, Reddy said.