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Indian banks unlikely to raise rates, saysPNB chief

Indian banks unlikely to raise rates, saysPNB chief
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First Published: Mon, Sep 01 2008. 02 20 PM IST
Updated: Mon, Sep 01 2008. 02 20 PM IST
Mumbai: “Indian banks are unlikely to raise lending rates for the next 5-6 months even if Reserve Bank of India(RBI) raised its key lending rate,” a top banker told a television channel today.
“Most banks have factored in another policy rate increase this year when they raised interest rates in June and July,” K.C. Chakravorthy, chairman and managing director of Punjab National Bank (PNB) told CNBC-TV18.
RBI raised its key lending rate three times in June and July to a seven-year high of 9%. India’s annual inflation stood at 12.40% on 16 August, above the central bank’s target of 7% by March-end.
“There may be some hike in the deposit rate, because still I feel that with inflation is 12%, we need to compensate savers to encourage their savings in this difficult market,” he said. The state-run bank chief said that an increase of 50 basis points in the cash reserve ratio or an increase of 25 basis points in the repo rate would not affect the bank’s margin by more than 10-15 basis points.
“If we feel that with little bit squeeze in the margin, still we are able to achieve our targetted net income growth, I don’t think banks will tamper with the interest rates, at least at this juncture,” he added.
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First Published: Mon, Sep 01 2008. 02 20 PM IST
More Topics: India | Bank | Rates | PNB | RBI |