Banks keep fingers crossed on hiking rates post RBI policy | india | Hindustan Times
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Banks keep fingers crossed on hiking rates post RBI policy

Bankers dub as "sensible" the marginal increase in statutory deposits - CRR - announced by RBI, saying the system had good liquidity.

india Updated: Apr 29, 2008 18:34 IST

Bankers on Tuesday dubbed as "sensible" the marginal increase in statutory deposits - CRR - announced by RBI, saying the system had good liquidity but most of them would wait to decide on hiking lending rates.

"It is not my sense that interest rates should rise," market leader SBI said, while the largest private bank ICICI said it would "wait and watch" - a view shared by most of the bankers.

"Ultimately interest rates are subject to demand and supply. Liquidity is good... I would wait and watch," said KV Kamath, CEO and MD of ICICI Bank.

HSBC India CEO Naina Lal Kidwai felt that "some banks might pass it on to the customers. HSBC would decide on its interest rates in about two-weeks."

Bankers were unanimous that RBI's policy was aimed at balancing growth and containing inflation and would not hurt the industry much.

"Due to the hike the profit and loss accounts of banks would take a hit. We can shoulder this much of impact when it comes to national interest," Kamath said, adding that "the credit policy would not hit the industry too much."

SBI Chairman O P Bhatt was confident that growth will be maintained as per RBI's projection of 8-8.5 per cent.

"There is no simple, direct relationship between the CRR hike and interest rates... There seems to a negative momentum to growth. A rate hike would dampen growth. Simultaneously inflation needed to be tackled and so RBI raised the CRR," he said.