Interest rates to go up, says ICICI Bank chief

Interest rates to go up, says ICICI Bank chief

New Delhi: The country’s largest private sector lender ICICI bank on Thursday said lending rates will start going up any time now, contrary to the SBI Chairman’s projection that borrowers can breathe easy till Diwali.

“I really believe that interest rates are not going to go down from here. Gradually they would go up. When? ...would really depend on how fast the credit growth takes place", ICICI bank chief executive officer and managing director Chanda Kochhar said.

Her statement comes a day after SBI Chairman OP Bhatt said that rates would not rise till Diwali and may even soften by 25-50 basis points before the busy season in October.

In April, ICICI bank was the first to reduce lending and deposit rates by 50 basis points after announcement of the annual credit policy by the Reserve Bank of India (RBI).

Replying to questions on impact of the large government borrowing on the financial system, Kochhar said, “I don’t think that amount is small. It does have its own impact on interest rates and financial system... I am sure there is a thought behind it."

In order to step up expenditure to stimulate the economy reeling under the impact of the global financial meltdown, the government decided to raise Rs4,51,000 crore through market borrowings this fiscal, up from Rs3,10,000 crore in 2008-09.

Expressing concern over the high government borrowing, RBI governor, D Subbarao had recently said that it was impairing the ability of the central bank to further lower the interest rates through monetary measures.