ICICI to cut interest rates soon

ICICI chief executive officer and managing director KV Kamath today hinted about a 'steep and substantial cut' in the interest rates in about two or three weeks, The cut will be in line with the market trends following the signals given by the government.

"We clearly see the processes where the market is signalling the rates down.Today, the leading indicator is the ten-year government bonds, which in a space of last two weeks, has moved down by about 1.5 per cent. We have to keep that in mind. That will set in motion the deposit and lending rates,'' he said speaking to reporters at the Indian School of Business here today.

The bulk deposit and annual deposit rates are also declining by about two per cent, This has been happening for about a week and is an indicator for the interest rates coming down, he said.

"Lending rates and borrowing rates do not change so quickly. The banks should be sure that the interest rates are reducing and that should be reflected in our books market.   The banks will understand that the rates are really coming down in a few more weeks. I can clearly see the prices coming down,'' he said

The drop in interest rates will be in line with market trends (about 1.5 per cent drop in the government bond interest rates and about 2 per cent in annual deposits). "A trend is set for the interest rates to follow,'' he said without quantifying the actual rate cut that would happen and  terming it as ''speculative''. He also expects the inflation to fall around five percent, which will make a cut in the interest rates inevitable.

The managing director of the largest private sector lender in the country felt all private sector banks would be 'revising the interest downwards' to remain competitive in the market.