The Hindu Business Line : Interest rates may remain stable, say bank chiefs

Lending rates for Special Economic Zones (SEZ) could move up following the recent RBI guidelines on capping real estate exposures, said Mr T.S. Bhattacharya, Managing Director, State Bank of India.

Interest rates may soften for other players, however, as liquidity in the banking system is good for now, said bank chiefs. Banks are unlikely to mark up deposit or lending rates in the near future. There was agreement on credit growth being around 25 per cent this fiscal.

While admitting to liquidity being comfortable, Mr O.P. Bhatt, Chairman, State Bank of India, said it needs to be seen if it is temporary as the "busy season is round the corner." He said SBI is likely to post good results for the second quarter.

"Corporate credit growth has picked up very well since September. The demand is for long-term loans in industries such as textiles and IT, among others," said Mr Bhattacharya. "Banks have also slowed down their exposure to real estate and are being selective in disbursing housing loans above Rs 15 lakh," he said.

Mr M.B.N. Rao, Chairman and Managing Director, Canara Bank, said, "Interest rates are likely to be stable on the asset side. There could be an exception on the liability side." Canara Bank is planning to raise $300 million overseas by November, he said. Of this, $100-million hybrid tier-I capital will be raised through perpetual bonds and $200 million through upper tier-II bonds.

Mr M. Balachandran, Chairman and Managing Director, Bank of India, also felt that interest rates might not jump in the near future.

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