The Hindu Business Line : Bank interest rates to drop in the next 2-3 weeks: Kamath

Hyderabad, Dec. 13 Interest rates in the banking sector are set to drop in the next 2-3 weeks. This would help borrowers taking loans for homes, auto, and education among others.

Indicating this, Mr K.V. Kamath, Managing Director and Chief Executive Officer of ICICI Bank, said, “the rate cut this time would be steeper, as I foresee inflation expectation rate to be below five per cent”.

Talking to newspersons on the sidelines of a conference at the Indian School of Business (ISB) here on Saturday, the ICICI chief said the market has signalled the rate cut already and reduction of rates was part of this process.

During the last two weeks, the rate on 10-year Government bonds moved down by 1.5 per cent.

“We need to keep that in view, as that would set in motion the deposit and lending rates.”

The bulk lending rates dropped by 150-200 basis points in the last one week.

It would further accelerate, thus, signalling correction. Lending and borrowing rates wouldn’t change so quickly.

Re-pricing

The banks were re-pricing their books, as they understood that rates were moving southwards.

“I can clearly see the re-pricing starting now. We will have to give it some time.”

To a specific query on whether ICICI Bank would bring down the rates, he said, “Any bank which doesn’t lower rates is not competitive.

“And, I am part of the system. Every one in the system will have to play the ball.”

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Bank interest rates to drop in the next 2-3 weeks: Kamath