Retail consumers are unlikely to benefit much from the peaking of interest rate cycle in the near term, said Chanda Kochhar, managing director and CEO, ICICI Bank, on Sunday, on the sidelines of the India Economic Summit, organised by the World Economic Forum.
"We have seen the peaking of interest rates, but it's too early to expect interest rates to start coming down," said Kochhar.
The Reserve Bank of India (RBI), in its credit policy last month, had hiked repo rates - the rate at which RBI lends to banks- by 0.25% to 8.5% - the 13th such increase in the last 19 months, to contain inflation, which stood at 9.72% at the end of September.
It had also deregulated savings deposit rate, prompting banks such as Yes Bank, IndusInd bank and Kotak Mahindra bank to hike their savings deposit rates to 6% from 4% earlier. Other banks are likely to follow suit.
If the bank raised its savings deposit rates, its retail customers could not expect a lowering in loan rates, said Kochhar. "If we hike savings deposit rates, we will not be in a position to reduce loan rates for retail consumers."
Hinting that a slowdown in capital inflows could further hit economic growth, which has been revised downwards to 7.6% from 8% earlier by the RBI, Kochhar said: "Capital inflows into India are slowing down, as globally they are slowing down. We have to watch these factors, because they will have some impact."
"There are very strong underlying factors driving the growth of the Indian economy, which is being driven by consumption, but given the world situation, no country is isolated," she said, adding, the country was witnessing a gradual moderation in growth.
International Monetary Fund (IMF) chief Christine Lagarde had recently warned that the world risked plunging into a "downward spiral" of financial instability and urged Asian economies to be on their guard.
On whether the removal of oil subsidies was the right way to tackle the high-price situation, Kochhar said, "I think, as far as inflation is concerned, it is my belief that in the long term, as a country, we have to focus on creating more supply."