The Hindu Business Line : Private sector, foreign banks to consider rate cut

New Delhi/Chennai, Nov. 5 The private sector and foreign banks have assured the Government that they will consider its plea for a cut in interest rates. None of the banks, however, indicated by how much the rates will be cut.

The Managing Director and Chief Executive Officer, Federal Bank, Mr M. Venugopalan, speaking on behalf of representatives of top private and foreign banks after their meeting with the Finance Secretary, Mr Arun Ramanathan, said his bank could cut interest rates by up to 50 basis points. But he added that a decision would be taken after the Asset Liability Committee meet. The Federal Bank CEO felt that things had improved in liquidity terms.

Briefing newspersons, Mr Ramanthan said the bankers felt that while liquidity at the moment was comfortable there was a need to keep looking at it on a regular basis.

The Finance Secretary said that the banks have assured that they will continue to support the existing lines of credit to the small and medium enterprises and non-banking finance companies and mutual funds.

Asked whether bank representatives wanted any more measures to improve liquidity, Mr Ramanathan said they were happy with the cuts announced by the RBI.

Besides, bank representatives also said that forex lines of credit were necessary for their branches abroad.

ICICI Bank had said at the time of its second quarter results announcement that it had entirely exited its non-India linked credit derivatives portfolio at no incremental loss over and above the provisions held. Speaking to analysts later, Ms Chanda Kochhar, Joint Managing Director, said that its foreign operations had enjoyed robust retail deposit growth and most of its borrowings in the international market were of a long term nature. She also said that the bank would have to repay about $1.4 billion over the next six months and the bank would have enough resources to repay it as it goes along.

The bankers’ meeting was attended by Mr Aditya Puri, Managing Director, HDFC Bank, Mr V. Leeladhar, Deputy Governor, RBI, and Mr Haseeb Drabu, Chairman and Managing Director, J&K Bank, and Ms Kochchar.

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