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Lending rates likely to go up after September: ICICI Bank

Lending rates likely to go up after September: ICICI Bank
PTI
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First Published: Mon, Jul 19 2010. 02 37 PM IST
Updated: Mon, Jul 19 2010. 02 37 PM IST
New Delhi: The country’s largest private lender, ICICI Bank, today said it expects lending rates to go up after September as credit offtake is likely to pick up in the second half of the current fiscal.
“My belief is the demand for liquidity will increase substantially in the second half of this year,” ICICI Bank CEO and managing director Chanda Kochhar said on the sidelines of a CII function.
“So, you would see some gradual increase in interest rate on the lending side over the next one year,” she said.
Asked about the initial public offering (IPO) plans of the bank’s subsidiary ICICI Securities, she said, “There is nothing in the offfing. Nothing in this fiscal.”
ICICI Securities is ICICI Bank’s broking and advisory unit which has pioneered an online share trading platform in India.
On base rate, Kochhar said that it has already been announced and lending rates are getting realligned with base rate.
“Immediately you will not see change in effective rate just because of the announcement of base rate,” she said.
Speaking about the current liquidity situation, she said, “It is sufficient.”
“As I am seeing a lot of economic activity coming back there would be a lot of credit demand in the second half that is when I think some of the excess liquidity that is there will go out,” Kochhar said.
On inflation, she said it is something that the economy needs to monitor as it is becoming widespread and is not just food related but has spread to other sectors as well.
“My feeling is as (production) capacity gets created in the country and supply improves that is the best way of correcting inflation. So, over a period one would see a very gradual correction of inflation taking place,” she said.
Asked about her expectation from the Reserve Bank’s policy review, scheduled for 27 July, she said there is a need to balance between checking inflation and ensuring that growth goes back to the old level of 9%.
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First Published: Mon, Jul 19 2010. 02 37 PM IST