Thursday, 16 October 2008

Interest rates need to come down: ICICI Bank

To ease liquidity in the system, the government and Reserve Bank of India announced a whole host of measures yesterday. RBI stepped in with another 1% cut in the cash reserve ratio. The Finance Minister also announced that RBI will provide Rs 25,000 crore to lending institutions immediately under the farm debt waiver scheme. Also, the FII limit in corporate bonds has been hiked to USD 6 billion from USD 3 billion.

Chanda Kochhar, Joint MD and CFO, ICICI Bank, feels interest rates in the system need to come down if we need to see more growth. "Whether we achieve by liquidity or repo rate measures is not that important. "
According to Kochhar, the economy in the current scenario may not be growing at 9%. "Even if we are growing at 7% or 7.5%, these are very good growth rates, given what is happening globally. We still see some fundamental factors remaining pretty strong and the rate of growth being better than what the other parts of the world are facing. But to continue the momentum and to pump it with a whole lot of liquidity, what is required is not just liquidity, but also interest rates, as both the retail credit and the investment pipeline is sensitive to the interest rate. Thus, it is required that the interest rates in the system come down."

Source: Moneycontrol

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