Though the Reserve Bank of India (RBI) left key rates untouched during its annual monetary policy on Tuesday, top bank officials said people could see fall in rates around April.
“It is in the interest of banks to reduce rates,” said Abheek Barua, economist with HDFC Bank. “Rate cut of around 100-150 basis points is due by April,” he said.
State Bank of India Chairman OP Bhatt said he would also look at reducing interest rates, while UCO Bank Chairman SK Goel said, “The bank plans to cut lending rates by 50 basis points.”
Though the liquidity situation is comfortable in India, reduced demand for loans is likely to pressure banks into lower lending rates. The slowdown has also affected people’s income and employment generation, brining about reduced demand for personal, vehicle and home loans.
“The hit can be seen more in urban area than in semi-urban and rural India,” said Jitender Balkrishnan, deputy managing director, IDBI Bank.
Dhanalakshmi Bank managing director and CEO Amitabh Charturvedi felt that lowering of the GDP growth to 7 per cent for the current year indicates deepening impact of recession. “This would have some impact on the credit off take in the coming months,” he said.