Mumbai: There is not much room for lending rates to come down immediately as banks’ cost of funds is still high but lower rates are in the interest of lenders themselves, the chairman of the Indian Banks’ Association said.
“It is in our own interest to bring down our lending rates so that our asset portfolios do not get impaired. We are making every endeavour to see that cost of funds are bought down,” IBA chairman TS Narayanasami told reporters on Wednesday.
He spoke to the media after a meeting with the Reserve Bank of India chief Duvvuri Subbarao and other central bank officials, ahead of the bank’s annual policy review on 21 April.
“We will see more banks dropping deposit rates in the next fortnight to recover their costs so that they can pass on the transmission of interest rates,” Narayanasami who is also the chairman and managing director of Bank of India said.
The central bank has been managing the government’s borrowing programme very efficiently, he added.
“There is no cause for the debt market to firm up at this level. It should soften and I think the way the RBI is responding, it should soften a bit,” Narayanasami said.