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Banker Hope For Respite from Interest Rate Hikes

MP Rana, Thursday 21st July 2011


Due to the continuous fall in borrowings and an unexpected rise in deposits in the monetary portfolio of the banks, the Indian bankers are eying the results of policy review which will be disclosed by the RBI next week on 26th July. The domestic bankers on Monday, urged the Central Bank to hold the policy rates at the current levels in the policy review due next week and to present a clear picture for the inflation and interest rates in the future.


The request for disclosure of future rates in the policy document has been made to facilitate the banks and industry people plan out their future course of action accordingly. In the light of ten consistent upward revisions in the policy rates by 275 basis points since last five quarters, analysts are fearing another 25 basis points hike in the upcoming policy review due to the high inflation situation persisting in the domestic economy and the fear of it to touch the double digit mark.


The major credit slowdown has been experienced with respect to the infrastructure sector which was one of the most vivid sectors in the previous year. All the changes in the policy rates since last few quarters have led the banks to face a spike in the liabilities, mainly related to saving account deposits, and a steep fall in overall lending.

With Contribution from Somil Gupta

 
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