By IANS
Bangalore : ICICI Bank Ltd chief K.V. Kamath Thursday admitted that the interest rate needs to be corrected to improve credit off-take despite liquidity in the system.
“I would still maintain interest rates need to be corrected though there is liquidity in the system. I believe the rate will tend to probably correct in south direction despite strong domestic liquidity flows.
“It is, however, too early to call. Let us wait and see. Banks and other financial services intermediaries are cautious,” Kamath told IANS on the sidelines of a quality summit here.
On the increase in cash reserve ratio (CRR) by 50 basis points, Kamath said banks were yet to assess the impact of the Reserve Bank of India’s (RBI) decision on their business.
“I am not hearing any banker talk of increase in interest rate despite a 0.5 percent hike in CRR to 7.5 percent. The banks are yet to find equilibrium to take a call on the rate,” Kamath pointed out.
Referring to the RBI’s decision to maintain status quo in interest and deposit rates, Kamath said bankers would start adjusting deposit rates downwards, which in turn would signal a correction in lending rates too.
“I think we will see some action over the next two-to-four weeks after bankers take stock of the situation,” Kamath hinted after delivering the keynote address at the 15th Quality Summit, organised by the Confederation of Indian Industry.