Locking into a borrowing rate may not be the right option just yet since there are indications that interest rates are likely to ‘pause' in the coming months.

Some of the bankers whom Business Line spoke to are of the opinion that going forward the interest rates may track the likely downward trend in inflation.

The floating rate structure could witness action right away. All things considered, advice for borrowers would be not to lock into a rate now.

As for those who want to avail fresh loans, there is no point in contracting one since the rates are at their peak. It is better for them to bide their time.

Another view is that the latest policy stance would have an impact on borrowers from the pass-through of the rate hike, which is a given.

On deregulation of savings bank deposit rates, a view is that it might just prove the Diwali indulgence the RBI could have done better without.

HOT ON HEELS

This is because this has apparently come ‘too hot on the heels' of the hike in the savings bank rate made in the last policy.

Customers have hardly been to appreciate the good tidings, if any, which would flow from that policy decision.

But, in reality, there have not been many since the salaried class has had any ‘big' amount to leave in savings bank at any given time.

So the timing of the decision to deregulate it is being taken with a pinch of salt.

Inflation-scalded customers are also wary that the deregulation might lead to an interest rate war.

The war cannot go on for ever without banks being forced to tinker with the other end of the spectrum – the lending window.

In this manner, the enhanced cost of funds would lead to a corresponding revision of the lending rates also.

So the least the RBI should have done was to wait until December, when, by its own admission, probabilities of persisting with the up-cycle were the least minimum.

One way banks could hope to absorb part of the hike and limit the pass-through is to cut transaction costs.

But this takes some doing since this would need wider induction of technology. Most of it is outsourced to third party vendors who are fighting wage inflation and other cost pressures, which can get reflected in the price they quote.

This is also something banks cannot afford to ignore, and is likely to get reflected in the pricing of its services.

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