Axis Bank hints at lending rate hike again

After raising its base rate in August, Axis Bank today hinted at raising its interest rates again, citing increasing cost of funds. "We believe the cost of funds will go up in this quarter by may be 10 basis points...so it is inevitable that some or all of that cost increase will get passed on.

So, it is fair to say that cost to the borrower will go up as well," Rajiv Anand, president for retail banking at Axis Bank, told reporters here. The bank had raised its base rate by 25 basis point to 10.25 per cent in August after the Reserve Bank announced slew of liquidity tightening measures to curb rupee's fall. Following the July 15 tightening by the central bank, almost all the leading private lenders like ICICI Bank and HDFC Bank and the nation's largest lender SBI too had upped their base rates.

SBI jacked it by just 10 bps while the other two raised 25 and 20 bps, respectively. The RBI raised the marginal standing facility from 8.25 per cent to 10.25 per cent in mid-July, thereby raising short-term borrowing rates. Talking on the retail assets side, Anand said, "perhaps the best of the credit cycle on the retail side is behind us.

We will see a slight uptick in terms of credit quality on the retail asset side." The bank today launched a mobile retail application with an aim to reach out to 15 lakh customers of the bank by next March. Anand said of the total transaction, mobile phones and the online banking account for 25 per cent. Initially, the bank has kept a daily transaction limit of Rs 1 lakh through mobile phone but plans to increase it to Rs 2 lakh after sometime, he added.