Increasing home loan EMIs may cause defaults: Kamath
KV Kamath, currently the non-executive chairman of India’s largest private sector lender, ICICI Bank has said retail consumers would be the worst hit because of the continuing interest rate hikes.
“The biggest impact and nobody has actually put that number into context is going to be the retail consumer. You and I are going to be the worst hit by this because over the last one year the average EMI has gone up by 30-40 %,” Mr Kamath
Mr Kamath said those on the verge of retirement are likely to face a 50-100 per cent rise in EMIs because banks will decrease the loan tenure for such consumers. “Now he (the consumer) will try and meet his commitments but God forbid if he starts defaulting that will be a sad day because the last 10 years have been driven by the momentum that consumer India has given,” Mr Kamath said.
Mr Kamath’s comments come on the back of RBI’s decision to hike repo rates by 0.5 percentage points last week. Most banks have announced a hike in interest rates following RBI’s decision resulting in higher EMIs for auto and home loans consumers.
Since March 2010, the RBI has raised policy rates nine times to control inflation. Consequently EMIs for loans have gone up by 2-3 per cent over the last year.
Mr Kamath was recently appointed as the non-executive chairman of Infosys. He has been the CEO of ICICI Bank for more than a decade.
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