Financial Daily from THE HINDU group of publications
Tuesday, Jan 17, 2006
Financial Daily from THE HINDU group of publications Tuesday, Jan 17, 2006 |
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Credit Market Money & Banking - Interest Rates Retail lending rates may rise: Purwar Our Bureau
Mumbai , Jan. 16 RETAIL lending rates, including housing loans, may rise in the short term because of the pressure on liquidity, said Mr A.K. Purwar, Chairman, State Bank of India. The pressure on liquidity is due to the recent redemption of India Millennium Deposits and the growing credit demand in the busy season, he said. When asked about how much he expects lending rates on the retail side to rise, Mr Purwar said, "There will certainly be upward pressure in the short term, but it is for individual banks to take the decision." Mr Purwar was speaking to reporters here today at the sidelines of a seminar on Basel-II norms organised by the National Institute of Bank Management. He said that liquidity could be under pressure till the end of the peak season. Banks are also looking at resource mobilisation methods such as securitisation of assets, refinancing from agencies such as Small Industries Development Board of India, National Housing Bank and Nabard apart from increasing deposit mobilisation, Mr Purwar said. Several banks are also raising equity capital. Many banks, including SBI, have already raised their domestic term deposit rates. SBI raised the deposit rates earlier this month by 25-50 basis points. HDFC Bank, Dena Bank, Union Bank of India, Bank of India, Bank of Baroda and Bank of Rajasthan had raised lending rates in November. According to Mr Paresh Sukthankar, Head, Credit and Market Risk, HDFC Bank, "If deposit costs look up, it is fair to expect some upward bias in lending rates. But when this will happen is difficult to say." Mr Shailendra Bhandari, Managing Director, Centurion Bank, also agreed that the market is showing signs of upwardly moving interest rates, but most players would wait till the RBI's quarterly review on January 24.
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