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Any further hike in interest rates might impact asset quality of certain advances such as project loans, according to Mr Bhaskar Sen, Chairman and Managing Director, United Bank of India.
“Hike in interest rate will lead to repricing of loans. Project loans where the revised rate of interest will turn out to be higher than IRR (internal rate of return) could be under some stress” he said.
The Reserve Bank of India is slated to announce its monetary policy review on Tuesday. Economists and senior bankers feel that that the central bank might inch up rates by about 25 basis points to counter inflation.
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