Only a few days after the state-run lender thought it wise to effect rate cuts by a huge 30 basis points to pass on the key interest rate to the end consumer, Axis bank upped its MCLR rate on the contrary by 5 bps.

The one year MCLR based on which its home loan and other products are charged now would stand at 8.3% effective today. This has been brought about as the third largest private sector has been struggling with the margins for quite a few quarters.

The gains witnessed in banking sector due to recapitalization programme of the govt through equity capital raising and issuance of recap bonds moved sentiments of the banking sector higher.

But the momentum is unlikely to sustain as mark to market losses due to rising yields are unlikely to get RBI's dispensation as provided in the hawkish statement of RBI's DG.

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