Thursday, June 5, 2008

HSBC India: Lending rates to remain “flat” in the near-term

According to top banker banks lending rates do not seem to come down they are likely to remain “flat” in the near-term. HSBC India Chief, Naina Lal Kidwai said "Lending rates do not look like going down — I expect them to remain flat in the near-term."

Regarding longer-term she said at present it is difficult for her to comment as rate movements will depend upon several factors. She added, "but I don't see them moving down."

She further added the spate of hikes in the cash reserve ratio (CRR) which was effected by the Reserve Bank of India over the last one year has started reflecting in cost of funds increasing as the cost of funds for banks is increasing.

She stated the CRR hikes have impacted in terms of both cost of money and liquidity.

"There is an impact on the liquidity position (following the 0.75 per cent hike in CRR effected recently by the BRI)," Kidwai said.

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