The bankers say that with the clear directions of the government to bring down inflation through monetary measures, the RBI has limited options apart from raising repo and reverse repo rates.
ABN Amro Bank's chief economist Abeek Barua said, "We are expecting increase in repo and reverse repo rate by 25 basis points, besides increase in capital requirement and risk provisions especially for the housing sector."
He said although the interest rates for the housing sector have gone up by as much 2.5 per cent in recent past, but it may further go up by 0.5 per cent over the next quarter as the banking regulator is likely to raise risk measures for housing sector.
"We feel the property market has overheated in select cities, where we have become stringent in sanctioning loans," K V Kamath, CEO and managing director, ICICI Bank told PTI.
He said heating of the property market has made the bank cautious in mortgage lending, forcing it to adopt stringent sanctioning norms. The floating interest rate for the housing sector is hovering around 10 per cent while fixed interest rate is around 11 per cent.
Finance Minister P Chidambaram has also hinted that RBI will take effective monetary measures to bring down inflation, while ensuring that productive sectors do not face any credit crunch.
Bankers said that heating of the property market especially in the metros like Delhi and Mumbai, where realty prices have more than doubled over the past two years mostly due to easy lending by the banks, can force the central bank to put sectoral restrictions on housing and other sensitive sectors.
Chidambaram had cautioned that growth in non-food credit by over 30 per cent as against around 20 per cent growth in bank deposits is not sustainable. Expecting hike in housing interest rates, builders in the nation capital are asking the clients to book flats immediately.
Ansal API vice president Kunal Banerjee said, "If interest rate on housing loans rises further, it will adversely affect the middle class and thereby hamper the demand for real estate."
Bankers said though the restrictions put on the housing sector by the RBI during its last credit review has slowed down the housing loan market, but it could still take additional steps to safeguard the banks from the overheating sector.
Commenting on the expectations from the credit policy, Oriental Bank's CMD K N Prithviraj said RBI could consider increasing risk weightages for sensitive sectors.
Barua added that the RBI could also announce cut in statutory liquid ratio by 50 basis point or a time frame for that cut coupled with increase in repo and reverse repo rates to meet its objectives.
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