Personal and home loans to become expensive

Not so good news on the financial front. The Economic Times reports that personal and home loans and credit card withdrawls are likely to become expensive. The RBI asked banks to set aside more money to cover risks on advances in these sectors when it raised short term lending rates to keep a check on inflation. Borrowing money to buy shares is also likely to become expensive.

Finance Minister P Chidambaram too said that housing sector would be insulated from the hike in repo rate and risk weightages. "That will bring comfort to the house owners." In the review, RBI increased provisioning requirement for the four sectors to two per cent. It means that banks now have to keep two paise for every rupee given to these sectors.