The Financial Stability Report (FSR) released by the Reserve Bank of India (RBI) is mostly reassuring. It confirms what the Committee on Financial Sector Assessment, headed by then-deputy governor Rakesh Mohan, had concluded almost exactly a year ago. The Indian banking sector is largely healthy. Banks are well-capitalised as far as regulatory capital adequacy ratios go and stress tests for credit and market risk show they can withstand ‘unexpected levels of stress. The problem, as the financial crisis showed, is that in the financial sector, it is hard to quantify the ‘unexpected’ , and when things begin to unravel, it doesn’t take long for even the big boys to go under; Lehman Bros being the classic example. So, while it is good to know that even if all the restructured loans were to turn non-performing, there would be no risk to the system and banks would continue to be well-capitalised , it would be naïve to ignore the reality that in the Indian context, a great deal of this robustness has to do with perceived confidence that comes from public ownership of close to 70% of the banking sector. Thus, even when Indian Bank’s capital was entirely eroded, there was no run on its deposits; in contrast to the bout of public anxiety over ICICI Bank, though its financial position was not endangered. Hence, as private sector players become larger, the RBI will need to be extra vigilant.
For the rest, the areas that need special attention include the potential asset-liability mismatch inherent in banks getting into infrastructure finance in a big way. As the report points out, a significant part of recent credit growth has been in infrastructure and commercial real estate, both requiring longer-term funding. However, bank deposits are essentially short term and, more important, are repayable on demand. Another area of concern is over-reliance on bulk deposits of the here-today-gone-tomorrow variety. Post the crisis, central counter-parties (exchanges) are being hailed as the answer to risks posed by trading in derivatives. However, as with securitisation, once seen as a win-win answer to risk mitigation, it would be unwise to see central counter-parties as fail-safe . They need to be regulated and monitored no less than banks and other financial sector players, as also rating agencies.
Monday, March 29, 2010
Tuesday, March 16, 2010
ICICI Bank aims at 15% growth
After having raised its ratio of low-cost deposits and pared unsecured loans, ICICI Bank plans to grow its balance sheet size by 15% in 2010-11, improving upon this year’s flat growth.
The bank would continue to grow its retail loans portfolio, project finance and working capital loans but would see the share of unsecured loans shrink, CEO & MD Chanda Kochhar said at the Idea Exchange programme of The Indian Express on Monday.
“The focus this year has been to change the composition of deposits and assets. We would probably end up with a flat balance sheet, but within that one could see a substantial change in the mix, with CASA (current account savings account) deposits going up and wholesale deposits coming down. Similarly, on the assets side, the secured loans might go up and the proportion of unsecured Personal loan and credit cards could come down,” Kochhar said. The bank’s CASA ratio has improved from 28% in 2008-09 to 38% now, she said.
She said the bank’s asset base will increase in 2010-11, with the pick-up in investments and credit demand in the second half of the next fiscal. “My estimate is that in these businesses (home, car loans and project and working capital finance) that we want to grow, we will be able to achieve 20-22% growth. Because some parts (unsecured loans and credit card) of our balance sheet will come down, net-net we may grow at 15% in the coming year,” Kochhar said. This would expectedly help ICICI Bank improve the market share it has been losing to rival banks.
While State Bank of India’s market share of assets rose from 15.9% in 2007-08 to 18.4% in 2008-9, ICICI Bank’s share fell from 9.7% to 7.2% during the years. HDFC Bank raised its market share from 2.6% to 3.1% in the same period. ICICI Banks’ asset base declined to Rs 3.8 lakh crore in 2008-09 from Rs 4 lakh crore in 2007-08. In the first quarters of the current fiscal, the asset base went further down to Rs 3.56 lakh crore.
She also expected investment to become the next driver of economic growth, supplementing the consumption-led growth seen in the past.
“The peculiar thing about India is that investments are being driven by underlying demand. Unlike other countries which have to force investment today, I think our investments are just fundamentally driven by demand and that is why they are much more productive.”
She said corporates are gearing up to invest and there is an up-tick in loan approvals. When asked what reform measures are needed to boost investment, she said procedural changes in areas like land acquisition, model concession agreements, termination clauses and dispute resolution would be of tremendous help. “That is more important for us to kick start investments. I don’t see big-bang reforms are required,” she added.
On the new banking licences proposed by the government, she said, “I think competition is always good for the customer. But what one has to see is the prudence and regulations in giving licences to new players. I am sure the RBI will take all that into account and come up with the detailed guidelines.”...
The bank would continue to grow its retail loans portfolio, project finance and working capital loans but would see the share of unsecured loans shrink, CEO & MD Chanda Kochhar said at the Idea Exchange programme of The Indian Express on Monday.
“The focus this year has been to change the composition of deposits and assets. We would probably end up with a flat balance sheet, but within that one could see a substantial change in the mix, with CASA (current account savings account) deposits going up and wholesale deposits coming down. Similarly, on the assets side, the secured loans might go up and the proportion of unsecured Personal loan and credit cards could come down,” Kochhar said. The bank’s CASA ratio has improved from 28% in 2008-09 to 38% now, she said.
She said the bank’s asset base will increase in 2010-11, with the pick-up in investments and credit demand in the second half of the next fiscal. “My estimate is that in these businesses (home, car loans and project and working capital finance) that we want to grow, we will be able to achieve 20-22% growth. Because some parts (unsecured loans and credit card) of our balance sheet will come down, net-net we may grow at 15% in the coming year,” Kochhar said. This would expectedly help ICICI Bank improve the market share it has been losing to rival banks.
While State Bank of India’s market share of assets rose from 15.9% in 2007-08 to 18.4% in 2008-9, ICICI Bank’s share fell from 9.7% to 7.2% during the years. HDFC Bank raised its market share from 2.6% to 3.1% in the same period. ICICI Banks’ asset base declined to Rs 3.8 lakh crore in 2008-09 from Rs 4 lakh crore in 2007-08. In the first quarters of the current fiscal, the asset base went further down to Rs 3.56 lakh crore.
She also expected investment to become the next driver of economic growth, supplementing the consumption-led growth seen in the past.
“The peculiar thing about India is that investments are being driven by underlying demand. Unlike other countries which have to force investment today, I think our investments are just fundamentally driven by demand and that is why they are much more productive.”
She said corporates are gearing up to invest and there is an up-tick in loan approvals. When asked what reform measures are needed to boost investment, she said procedural changes in areas like land acquisition, model concession agreements, termination clauses and dispute resolution would be of tremendous help. “That is more important for us to kick start investments. I don’t see big-bang reforms are required,” she added.
On the new banking licences proposed by the government, she said, “I think competition is always good for the customer. But what one has to see is the prudence and regulations in giving licences to new players. I am sure the RBI will take all that into account and come up with the detailed guidelines.”...
Monday, March 15, 2010
Caution is key word at banks as NPAs fly
Banks’ non-performing assets have shot up nearly 30% at the end of calendar 2009 from a year ago due to stress in many sectors and farm loan waiver, indicating sharply lower profits for banks and possibility of curbs on exposure to sectors that have contributed to the bad assets.
In a reply to the Rajya Sabha, the government said the overall NPAs have increased to Rs 80,023 crore at the end of December 2009 from Rs 61,647crore at the end of December 2008, an increase of over 30%. “Banks will be more cautious towards lending to sectors such as real estate, exports and even retail loans,” says a senior banker with a private bank. A number of private banks have already curtailed their retail lending, specially personal loan.
A recent report by Fitch ratings on ‘banks’ restructuring loan portfolio’ pointed that restructured bank loan worth Rs 30,675 crore may turn bad in 2010-11 and further push up banks’ gross non-performing assets (NPAs) on an average by one percentage point.
State-owned banks, however, feel that the rising NPAs will not impact their profitability and that NPAs are minuscule as compared to the total advances.
“If you look at our figures, the gross NPAs are at 1.8% of our total advances. Besides, all banks have been making provisions for these loans, which have been reflected in third quarterly results. There will be some caution but it’s not over-exercised,” said CGM Punjab National Bank, RIS Sidhu.
The bank reported a flat 1% increase in the net profit to Rs 1011.31 crore for the third quarter of this financial year.
Country’s largest lender, State Bank of India (SBI) also feels that increase in NPAs would not result in lending curbs. “There are no indications that loans to a particular sector has totally gone bad. Every sector has reported bad assets and there seems no reason to stop lending to any particular sector,” said chief financial officer SBI, SS Ranjan.
Incidentally, the gross NPAs to gross advances for the public sector banks has also shown an increase of 0.27% as compared with last year.
In a move that could put more pressure on PSBs, the government has allowed an extension for loan repayments to large farmers under the Agricultural Debt Waiver and Debt Relief Scheme. The total amount under the one time settlement (OTS) for large farmers is estimated at Rs 10,000 crore.
In a reply to the Rajya Sabha, the government said the overall NPAs have increased to Rs 80,023 crore at the end of December 2009 from Rs 61,647crore at the end of December 2008, an increase of over 30%. “Banks will be more cautious towards lending to sectors such as real estate, exports and even retail loans,” says a senior banker with a private bank. A number of private banks have already curtailed their retail lending, specially personal loan.
A recent report by Fitch ratings on ‘banks’ restructuring loan portfolio’ pointed that restructured bank loan worth Rs 30,675 crore may turn bad in 2010-11 and further push up banks’ gross non-performing assets (NPAs) on an average by one percentage point.
State-owned banks, however, feel that the rising NPAs will not impact their profitability and that NPAs are minuscule as compared to the total advances.
“If you look at our figures, the gross NPAs are at 1.8% of our total advances. Besides, all banks have been making provisions for these loans, which have been reflected in third quarterly results. There will be some caution but it’s not over-exercised,” said CGM Punjab National Bank, RIS Sidhu.
The bank reported a flat 1% increase in the net profit to Rs 1011.31 crore for the third quarter of this financial year.
Country’s largest lender, State Bank of India (SBI) also feels that increase in NPAs would not result in lending curbs. “There are no indications that loans to a particular sector has totally gone bad. Every sector has reported bad assets and there seems no reason to stop lending to any particular sector,” said chief financial officer SBI, SS Ranjan.
Incidentally, the gross NPAs to gross advances for the public sector banks has also shown an increase of 0.27% as compared with last year.
In a move that could put more pressure on PSBs, the government has allowed an extension for loan repayments to large farmers under the Agricultural Debt Waiver and Debt Relief Scheme. The total amount under the one time settlement (OTS) for large farmers is estimated at Rs 10,000 crore.
Wednesday, March 3, 2010
Standard chartered India operating profit up 19%
With a outstanding income growth driven by a very strong performance in wholesale banking, partly offset by lower income in consumer banking, the Indian operations of Standard Chartered Bank a reported a 19 per cent increase in operating profit to $ 1.06 billion (Rs 4,886 cr) for 2009, compared to the last year
Excluding proceeds from the sale of the bank’s mutual fund recognised in the 2008 results, the growth in operating profit was 42 %.
Wholesale banking recorded a 49 % increase in operating profit to $ 1.06 billion from $ 674 million in 2008.
However, consumer banking saw a 24 % drop in operating profit to $ 54 million (Rs 248.4 cr) from $ 71 million in the previous year.
Impairments, which were mostly on the consumer banking side, grew 16 % to $ 182 million (Rs 837.2 cr).
Regional Chief Executive, India and South Asia , Neeraj Swaroop, said, “We have seen some increase in impairments in 2009 due to adverse global market conditions but we have not stopped lending and our credit growth is 10 per cent till December-end. We expect to achieve 10-20 per cent growth in 2010,”.
The bank’s net non-performing assets stood at 1.9 %, while gross NPAs stood at 2.9 % as on December 31, 2009.
Regional Chief Executive also said the bank has sought the Reserve Bank of India’s approval to open more branches, and said it would install 100 automated teller machines in 2010. “The bank is also looking to hire over 2,500 people this year.”
Click Here to Know More About :-
Standard Chartered Home Loan
Standard Chartered Personal Loan
Excluding proceeds from the sale of the bank’s mutual fund recognised in the 2008 results, the growth in operating profit was 42 %.
Wholesale banking recorded a 49 % increase in operating profit to $ 1.06 billion from $ 674 million in 2008.
However, consumer banking saw a 24 % drop in operating profit to $ 54 million (Rs 248.4 cr) from $ 71 million in the previous year.
Impairments, which were mostly on the consumer banking side, grew 16 % to $ 182 million (Rs 837.2 cr).
Regional Chief Executive, India and South Asia , Neeraj Swaroop, said, “We have seen some increase in impairments in 2009 due to adverse global market conditions but we have not stopped lending and our credit growth is 10 per cent till December-end. We expect to achieve 10-20 per cent growth in 2010,”.
The bank’s net non-performing assets stood at 1.9 %, while gross NPAs stood at 2.9 % as on December 31, 2009.
Regional Chief Executive also said the bank has sought the Reserve Bank of India’s approval to open more branches, and said it would install 100 automated teller machines in 2010. “The bank is also looking to hire over 2,500 people this year.”
Click Here to Know More About :-
Standard Chartered Home Loan
Standard Chartered Personal Loan
Tuesday, February 23, 2010
Personal loan as a short-term finance option
In the last few weeks, calls from telemarketers have already gone up asking you to sign up for personal loans. The difference this time is that most banks want to lend to their own customers and in many cases, customers are being offered pre-approved loans to cut down on processing time.
While a personal loan is a short-term finance option, it is often used by many for long-term needs. In the process, a borrower ends up paying up a higher interest amount if he fails to clear the loan on the due date. On the contrary, a personal loan can be a handy option if chosen with care.
How to make better use of a personal loan?
Some tips to help you make better use of a personal loan:
Compare total interest payable
A personal loan with an interest rate of 14-28 percent is a better option than a high cost credit card loan as the latter charges interest in excess of 35 percent.
The same holds good for those who are in the habit of taking hand loans which carry higher rates. For such borrowers, a personal loan would be a cost-effective option and more importantly, it enables the borrower to repay the loan in totality.
Repay the loan in short to medium terms
Often, salaried professionals use a personal loan as a component of property investment. The margin money of the property cost is funded by a personal loan.
The idea is good provided the borrower is in anticipation of some funds coming in a few months later, and is in a position to clear the loan. Or else, the loan amount should not be more than a few lakhs so that it does not pinch the borrower considerably.
For instance, if a property investor is short of funding to the extent of Rs 2-5 lakhs for a property which is valued in excess of Rs 50 lakhs, the implications would not be severe. On the contrary, if the borrower depends on the personal loan to take care of more than 25-30 percent of the property cost, the chances are that he would be unable to repay the loan in the short to medium terms.
EMI a determining factor in personal loan
Keep track of EMI
Unlike other loan products, the EMI is the determining factor in a personal loan.
Since the loan is for a shorter period of time, the EMI is much higher, which is also the reason why some struggle with their cash positions after signing up for a personal loan. Hence, a personal loan should be determined by the EMI component rather than just eligibility.
This will help the borrower to be realistic with the loan repaying capabilities and not get into a default.
Keeping good credit track record
Be a good borrower
Signing up for a personal loan may be the easiest thing to do but make sure to be a good borrower as non-repayment or lack of commitment towards repayment can tarnish the creditworthiness. With banks providing details of all borrowers to the common database under the Credit Information Bureau (India) Ltd (CIBIL), a negative entry relating to payment history can make it tough for all future loans.
Also, borrowers need to make sure to complete the documentation relating to disputed loans as a failure to do so may make it difficult for future borrowing.
While a personal loan is a short-term finance option, it is often used by many for long-term needs. In the process, a borrower ends up paying up a higher interest amount if he fails to clear the loan on the due date. On the contrary, a personal loan can be a handy option if chosen with care.
How to make better use of a personal loan?
Some tips to help you make better use of a personal loan:
Compare total interest payable
A personal loan with an interest rate of 14-28 percent is a better option than a high cost credit card loan as the latter charges interest in excess of 35 percent.
The same holds good for those who are in the habit of taking hand loans which carry higher rates. For such borrowers, a personal loan would be a cost-effective option and more importantly, it enables the borrower to repay the loan in totality.
Repay the loan in short to medium terms
Often, salaried professionals use a personal loan as a component of property investment. The margin money of the property cost is funded by a personal loan.
The idea is good provided the borrower is in anticipation of some funds coming in a few months later, and is in a position to clear the loan. Or else, the loan amount should not be more than a few lakhs so that it does not pinch the borrower considerably.
For instance, if a property investor is short of funding to the extent of Rs 2-5 lakhs for a property which is valued in excess of Rs 50 lakhs, the implications would not be severe. On the contrary, if the borrower depends on the personal loan to take care of more than 25-30 percent of the property cost, the chances are that he would be unable to repay the loan in the short to medium terms.
EMI a determining factor in personal loan
Keep track of EMI
Unlike other loan products, the EMI is the determining factor in a personal loan.
Since the loan is for a shorter period of time, the EMI is much higher, which is also the reason why some struggle with their cash positions after signing up for a personal loan. Hence, a personal loan should be determined by the EMI component rather than just eligibility.
This will help the borrower to be realistic with the loan repaying capabilities and not get into a default.
Keeping good credit track record
Be a good borrower
Signing up for a personal loan may be the easiest thing to do but make sure to be a good borrower as non-repayment or lack of commitment towards repayment can tarnish the creditworthiness. With banks providing details of all borrowers to the common database under the Credit Information Bureau (India) Ltd (CIBIL), a negative entry relating to payment history can make it tough for all future loans.
Also, borrowers need to make sure to complete the documentation relating to disputed loans as a failure to do so may make it difficult for future borrowing.
Tuesday, February 16, 2010
Loan Against Property- An easy way to fulfill your Financial Needs
Loan against property is cheaper than personal loans.
Banks have aggressively beefed up their loan against property portfolio, in the last one year. but in October 2008 the credit crunch, bankers looked for products that were secured and Loan against property (Lap) was a clear choice.
Loan against property was basically a domain of multi-national and private banks. They offered the product to fund their self-employed customers’ business-related needs. Lately, all banks are offering this product including the public sector banks.
This has come as a boon for borrowers who need large sum of money to fund their urgent situation financial needs. Bankers said that mostly salaried customers take Lap when they need money for marriage or foreign education of kids, when they are buying a new property and are renovating their house. Self-employed seek this loan to fund their business needs and to pay off debt.
In Lap, customers can avail up to 50 % loan of the existing property value. The interest rate in Lap is around 200-300 basis point higher than bank home loan. This is a floating rate loan. “Lenders see more risk in this product and so price it higher,” said a banker. The current rate can range between 12-14 %.
The minimum loan that banks disburse in this product is around Rs 2 lac – example -HDFC Bank. Foreign banks, have higher limits, some look for minimum loan size of Rs 20 lac.
"The amount of loan disbursed depends on the end use. For instance, if the property is Rs 2 crore, obviously we will not sanction a loan of Rs 1 crore for renovation of the house," said head of retail assets with a foreign bank. Before taking the loan, the borrower needs to sign a declaration stating the end-use of fund.
If the property is currently not under any mortgage, the process to avail a Lap is simpler as compared to a mortgaged one. In the former, the process is similar to taking a housing loan. The customer needs to give evidence for being able to pay the instalments. For this, the borrower needs to submit a salary proof and income tax certificates. The bank, then, comes down to evaluate the property. A no-objection certificate, is also required, from the society.
In case of a mortgaged property, the person can go for a top-up loan with the bank he has an ongoing loan with. In this case, the bank will fund the difference between the outstanding and the original loan taken. For example: A person has taken a Rs 30 lac loan for the property that was worth Rs 40 lac at the time of purchase. He has an outstanding is Rs 20 lac. The same bank will give him a top-up loan equal to the difference between the outstanding and the original loan, even if the property cost has risen. Here, it would be Rs 10 lac.
On the other hand, if fund requirement is higher the borrower can approach another bank and opt for a product called 'balance transfer plus top-up'. This is part of Loan against property. The other bank will take fresh look at the property value, take over the loan and lend up to 50 % of the existing value. In the above example, if the house price is now Rs 70 lac, the bank will take over the Rs 20 lac outstanding. The customer can avail funds up to Rs 15 lac (50 per cent of the property value, which is Rs 35 lac, minus the existing loan of Rs 20 lac).
Banks have aggressively beefed up their loan against property portfolio, in the last one year. but in October 2008 the credit crunch, bankers looked for products that were secured and Loan against property (Lap) was a clear choice.
Loan against property was basically a domain of multi-national and private banks. They offered the product to fund their self-employed customers’ business-related needs. Lately, all banks are offering this product including the public sector banks.
This has come as a boon for borrowers who need large sum of money to fund their urgent situation financial needs. Bankers said that mostly salaried customers take Lap when they need money for marriage or foreign education of kids, when they are buying a new property and are renovating their house. Self-employed seek this loan to fund their business needs and to pay off debt.
In Lap, customers can avail up to 50 % loan of the existing property value. The interest rate in Lap is around 200-300 basis point higher than bank home loan. This is a floating rate loan. “Lenders see more risk in this product and so price it higher,” said a banker. The current rate can range between 12-14 %.
The minimum loan that banks disburse in this product is around Rs 2 lac – example -HDFC Bank. Foreign banks, have higher limits, some look for minimum loan size of Rs 20 lac.
"The amount of loan disbursed depends on the end use. For instance, if the property is Rs 2 crore, obviously we will not sanction a loan of Rs 1 crore for renovation of the house," said head of retail assets with a foreign bank. Before taking the loan, the borrower needs to sign a declaration stating the end-use of fund.
If the property is currently not under any mortgage, the process to avail a Lap is simpler as compared to a mortgaged one. In the former, the process is similar to taking a housing loan. The customer needs to give evidence for being able to pay the instalments. For this, the borrower needs to submit a salary proof and income tax certificates. The bank, then, comes down to evaluate the property. A no-objection certificate, is also required, from the society.
In case of a mortgaged property, the person can go for a top-up loan with the bank he has an ongoing loan with. In this case, the bank will fund the difference between the outstanding and the original loan taken. For example: A person has taken a Rs 30 lac loan for the property that was worth Rs 40 lac at the time of purchase. He has an outstanding is Rs 20 lac. The same bank will give him a top-up loan equal to the difference between the outstanding and the original loan, even if the property cost has risen. Here, it would be Rs 10 lac.
On the other hand, if fund requirement is higher the borrower can approach another bank and opt for a product called 'balance transfer plus top-up'. This is part of Loan against property. The other bank will take fresh look at the property value, take over the loan and lend up to 50 % of the existing value. In the above example, if the house price is now Rs 70 lac, the bank will take over the Rs 20 lac outstanding. The customer can avail funds up to Rs 15 lac (50 per cent of the property value, which is Rs 35 lac, minus the existing loan of Rs 20 lac).
Friday, February 5, 2010
ICICI Bank cuts down unsecured loan offtake
The country’s largest private sector bank ICICI Bank said that it is pruning its portfolio of unsecured retail loans, including personal loans, small-ticket loans and credit cards.
“As far as credit growth is concerned, for the past three quarters, ICICI bank constantly letting unsecured retail portfolio to go down. ICICI are growing corporate finance book both on project finance and trade finance. ICICI bank are growing 20 per cent in the auto and housing sectors. It’s the other products such as personal loans, small-ticket loans and credit cards, which are coming down,” Chanda Kochhar, managing director and chief executive officer of ICICI Bank, said
Kochhar said there has been a pickup in credit during recent times. “A lot of investment activities have started to take place. Lots of projects have seen financial closure. They have started initial investment. Demand for credit will pick up in a big way in the next financial year. Deposits are picking up substantially, if you see quarter-on-quarter our CASA (current account savings account) deposits have show reasonable growth, both in terms of absolute volumes and in value,” she added.
In the recent past, the Indian banking system has witnessed a very low credit growth. As the economy recovers and investment activities coming back to normalcy, credit offtake is also like to witness gradual growth.
K V Kamath, chairman, ICICI Bank, concurred with Kochhar and said that RBI’s move will not impact interest rates during the coming nine months. “For the first nine months, I don’t think there is a real pressure on interest rates. There is still enough liquidity in the system. I think liquidity needs to come down to push up interest rates,” Kamath said.
Kochhar said there would not be any immediate impact on interest rates if the cash reserve ratio (CRR) is hiked by the Reserve Bank of India (RBI). "Interest rates are driven not just by policy announcements, but more by demand and supply of credit and liquidity,” she said.
“As far as credit growth is concerned, for the past three quarters, ICICI bank constantly letting unsecured retail portfolio to go down. ICICI are growing corporate finance book both on project finance and trade finance. ICICI bank are growing 20 per cent in the auto and housing sectors. It’s the other products such as personal loans, small-ticket loans and credit cards, which are coming down,” Chanda Kochhar, managing director and chief executive officer of ICICI Bank, said
Kochhar said there has been a pickup in credit during recent times. “A lot of investment activities have started to take place. Lots of projects have seen financial closure. They have started initial investment. Demand for credit will pick up in a big way in the next financial year. Deposits are picking up substantially, if you see quarter-on-quarter our CASA (current account savings account) deposits have show reasonable growth, both in terms of absolute volumes and in value,” she added.
In the recent past, the Indian banking system has witnessed a very low credit growth. As the economy recovers and investment activities coming back to normalcy, credit offtake is also like to witness gradual growth.
K V Kamath, chairman, ICICI Bank, concurred with Kochhar and said that RBI’s move will not impact interest rates during the coming nine months. “For the first nine months, I don’t think there is a real pressure on interest rates. There is still enough liquidity in the system. I think liquidity needs to come down to push up interest rates,” Kamath said.
Kochhar said there would not be any immediate impact on interest rates if the cash reserve ratio (CRR) is hiked by the Reserve Bank of India (RBI). "Interest rates are driven not just by policy announcements, but more by demand and supply of credit and liquidity,” she said.
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