The Reserve Bank’s mid-year tightening of the monetary policy is not likely to make home, car and other loans more costly immediately, but pressure on interest rates is likely to build up in the coming months, according to top bankers.

“There will be no immediate increase in interest rates after the (RBI) rate hike… There is an upward bias on interest rates which is due to a combination of many things, not just the (RBI) rate hike,” ICICI Bank Chief Executive and Managing Director Chanda Kochhar said.

According to State Bank of India Chairman O P Bhatt, it will take two to three months for the Reserve Bank rate hike to get reflected in lending rates.

First, the deposit rates will be hiked, following which lending rates will go up, he said.

The transmission mechanism between the RBI and rest of the financial system does not work very fast, the SBI chairman said. It always works with a time lag, he said.

Continuing with its monetary tightening drive for the sixth consecutive meeting this year, the RBI on Tuesday raised key short-term policy rates to rein in inflation.

The RBI hiked the key short-term lending and borrowing rates by 25 basis points (0.25 per cent) each with immediate effect.

Accordingly, the short-term lending (repo) rate has increased to 6.25 per cent and the borrowing (reverse repo) rate to 5.25 per cent.

In a clear indication of a perceived asset bubble, the central bank tightened norms for housing loans by asking banks to keep aside more funds against home loans extended at “teaser” rates and decreasing the cap on loans made against realty buys by consumers, known as the loan-to-value (LTV) ceiling.

SBI, which was the first lender to introduce highly competitive teaser rates last year, is more likely to absorb the additional cost of funds that might result out of the RBI’s move to increase provision ratios, Bhatt said.

SBI will take a call on whether to extend its teaser scheme or not by end-December, he said.

The additional measures taken by the RBI on Tuesday will result in an increase of 0.05-0.10 per cent in the cost of funds, Bhatt said.

The RBI’s move to decrease the LTV will affect lenders in the premium segment and not SBI, whose average LTV is under 70 per cent, he said, adding that currently, nearly 13 per cent of the bank’s total advances, or Rs 75,000 crore, were in the housing segment.

Kochhar said ICICI, which had the popular “90:10” scheme under which it funded a majority of the home-buying amount, will not be affected much as the amounts allocated under the scheme are not large.