More rate cuts needed says HDFC

Author: Anurag Bhullar

To have more comfortable lending and deposit rates, banking industry is looking forward to have more rate cuts by RBI. Deepak Parekh of HDFC said that even after 100 basis points cut in repo rate, more reductions are required to correct the financial system, which presently appears more or less out of the place.

While answering whether interest rates can decline, he said that a drop in deposit rates is expected to occur, later followed by fall in lending rates. Further, he denied that market needs more liquidity. He expects real estate prices to go down as the amount of sales is not at all attractive.
	The discounts offered by developers have failed in bringing buyers to them. Interest rates in the range of 8-9% can be easily afforded by common man, however presently; the rates are as high as 12%. This has caused the real estate properties to go out of their reach. Residential buyers have been staying away and will continue to do so if these values do not dip. Moreover, due to raw material prices going up, the cost being incurred in developing projects are also shooting upwards. The deteriorated situation got reflected in the property fair held in Mumbai recently, which got a very sluggish response.