BoI hints at corporate rate hike

Bank of India (BoI) today hinted at an increase in short-term lending rates for corporates, soon after the redemption of $5.5 billion of India Millennium Deposits (IMDs) on December 29, 2005.

The redemption of State Bank of India's IMDs would impact liquidity in the system and BoI would review lending rates after redemption of IMDs, chairman, M Balachandran said.

The US Federal Reserve is expected to carry on with its rate increases, further putting an upward pressure on domestic rates.

Balachandran, however, clarified that lending rates for infrastructure and projects would continue to remain 'soft'.

Referring to home loans growth, he said bank's housing loan portfolio was about Rs 3,024 crore. It is expected to grow annually at 38- 40 per cent in the next few years.

About one lakh customers have availed of home loans from BoI and 25,000 new home loan customers would be added in the next one year.

He was talking to reporters at the announcement of a tie-up with ICICI Prudential Life Insurance to provide mortgage term assurance cover to bank's home loan customer. This product will cover outstanding loan amount in the event of unfortunate death of a borrower.