The Indian economy is showing signs of revival. And this would mean that credit offtake (demand for loans) is expected to increase. However, according to State Bank of India Chairman O.P. Bhat, a hardening of interest rates would take some time to come.
Giving the theme address during a three-day conference on global banking organised by industry chamber FICCI and the Indian Banks Association (IBA), he said: “We say that we are well positioned to take advantage of the broad based growth that we have been seeing in the economy. But even today, we don’t have banks that are large enough to handle the account of very large corporate who still have to take the services of 10 or more banks for one single project,” Bhat said.
“Liquidity overhang will not let interest rates harden,” he said.
Private banks too are seeing a rise in their credit offtake. “We have seen a good growth in our home loan portfolio in recent months, even as the demand for car loans increases,” said Chanda Kochhar, MD and CEO, ICICI Bank, citing reasons such as a fall in interest rates and an increase in job confidence as some of the drivers for this rise.
“As the economy grows people would look at borrowing more,” said Naina Lal Kidwai, group general manager and country head, India, HSBC. However, she said interest rates could harden in the near future.