The Indian economy is currently expanding at the rate of 9 percent per annum but still the liquidity condition remains tight. It is expected that banks can increase their lending rates by at least 1 percent in the year 2011.
Chairman and Managing Director of Canara Bank, Mr S. Raman said, “Interest rates have not yet peaked, Rates may go up if liquidity remains tight and demand for loans increases.”
During the last year the credit growth was much faster than that of deposit rate. RBI was expecting a growth of 20 percent in the credit during the Year but it grew with 23.7 percent while the deposit showed only 14.7 percent growth.
On Friday, ICICI bank and State Bank of India raised their lending rates. Almost all the banks have raised their lending rates to 9 percent in the recent weeks.
Mr K R Kamath CMD of Punjab National Bank said “So long as there is pressure on liquidity, pressure on margins will continue,Also, there will be resistance among borrowers to absorb a hike in lending rates, but if deposits do not grow in turn with credit growth, banks will need to attract depositors by offering higher rates keeping inflation in mind.”
Inflation showed signs of rest for a few months, but it is again on a high. The food prices are increasing at record rate.
Hemant Mishra, head of global markets Standard Chartered said, “RBI is likely to continue with (its) tight liquidity stand to ensure efficient transmission of monetary policy. However, we do expect liquidity deficit level to come off to Rs 50,000-60,000 crore once demand and supply gap normalises”.
No comments:
Post a Comment