Bankers see no upward movement in interest rates

Amidst ample liquidity, bankers do not see interest rates moving up and State Bank of India Chairman O P Bhatt expects the cost to even fall in the next few months.    

"In the next 4-6 months, I do not see interest rates going up. Either they will remain stable or may even drop," Bhatt told reporters here after receiving the award from Prime Minister Manmohan Singh for excellence in financing small and medium enterprises.

Bhatt said there is enough liquidity in the banking system, so much so that different banks are offering "all kinds of schemes on specific kinds of products, which are very competitive".     

 

While inflation has stayed in the negative territory for past several weeks, analysts are wondering whether the interest rates has bottomed out with signs of economic recovery. The Reserve Bank left the benchmark rates unchanged in its July credit policy.

Central Bank of India Chairman and Managing Director S Sridhar also does not see any upward movement in the interest rates in the festival season.

" In the short-term, interest rates would depend on liquidity, which was enough in the system," Sridhar said.

Chairman and Managing Director of Union Bank M V Nair said it is not the interest rates but the lack of demand in the economy that is a cause of concern.

"I think interest rate is not a concern...It is only the pick up in demand which is a concern," he said.

Nair, however added that the demand is likely to pick up in the next six to eight months due to improvement in the industrial production.