K V Kamath, ICICI Bank chairman hinted on Dec 13 that the deposit and lending rates are set to fall in the next 2-3 weeks. However, he said that the when benefits will reflect on their books then banks will start passing on the profit to customers. He pointed out that the fall in interest rates of 10-year government bonds indicate that shortly deposit and lending rates will come down.
We clearly see a process where markets are signaling the rates down. The leading indicator, 10-year government bonds, in the past few weeks has dropped by 1.5 percentage points. We need to keep that in context because that will determine movements in deposit and lending rates, Kamath said.
He was speaking to reporters on the sidelines of a conference on discussing business strategies for emerging India at the Indian School of Business in hyderabad. He said that the one-year deposit rate has dropped almost by 150-200 basis points in the last one week. The lending and borrowing rates don''t change so quickly because the whole book has to be repriced. I can see the repricing starting now and we have to give a little time for rates to get lower, Kamath said.
Kamath refused to say by how much the rates will drop. However, he said the fall in the interest rates of government bonds and one-year term deposits, around 2 percentage points, are indicative. The estimated inflation rate, below 5 per cent, will also lead to a substantial drop in the interest rates, Kamath asserted.
We clearly see a process where markets are signaling the rates down. The leading indicator, 10-year government bonds, in the past few weeks has dropped by 1.5 percentage points. We need to keep that in context because that will determine movements in deposit and lending rates, Kamath said.
He was speaking to reporters on the sidelines of a conference on discussing business strategies for emerging India at the Indian School of Business in hyderabad. He said that the one-year deposit rate has dropped almost by 150-200 basis points in the last one week. The lending and borrowing rates don''t change so quickly because the whole book has to be repriced. I can see the repricing starting now and we have to give a little time for rates to get lower, Kamath said.
Kamath refused to say by how much the rates will drop. However, he said the fall in the interest rates of government bonds and one-year term deposits, around 2 percentage points, are indicative. The estimated inflation rate, below 5 per cent, will also lead to a substantial drop in the interest rates, Kamath asserted.
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