Financial Daily from THE HINDU group of publications
Tuesday, Oct 04, 2005

Port Info

Group Sites

Home Page - Interest Rates
Money & Banking - Interest Rates

Banks expect hike in interest rates: Survey

Our Bureau

About 75 per cent of the banks surveyed expect the interest rate to increase by 5 basis points, whereas the remaining expect it to go up by one percentage point.

Mumbai , Oct. 3

BANKS are expecting a rise in interest rates, with the Reserve Bank of India's quarterly review of the Monetary Policy around the corner.

This anticipation is reflected in the bond prices, which seem headed downwards, prior to the policy. A similar response is also seen in a survey conducted by the Federation of Indian Chambers of Commerce and Industry.

The survey was conducted among 55 banks including 28 public sector banks, 19 private sector banks and eight foreign banks.

In the survey, 64 per cent of the participants said they foresee a rise in interest rates in the future. Out of these, 74 per cent expect the interest rate to increase by 5 basis point, whereas the remaining expect it to go up by one percentage point.

Around 62 per cent of the participants said the increased rates are likely to have an adverse impact on corporate sector lending to some extent, especially the AAA-rated borrowers.

A large number of participants felt the RBI's guidelines on ownership and cross holding in private banks need to be relaxed. As per the guidelines, no single entity or group can hold more than 10 per cent of paid-up capital and no private sector bank can have more than five per cent stake in other private banks. Around 48 per cent of the overall participants and 67 per cent of private banks asked for the guidelines to be relaxed.

Confirming that the retail route is the fastest way to grow, 53 per cent of the banks said they intended to increase their retail portfolio by more than 25 per cent in 2005-06.

The UAE proved to be the most preferred location for overseas expansion, followed by China, the UK, the ASEAN countries and the US.

Seventy five per cent of the foreign banks that participated in the survey expressed complete dissatisfaction with the RBI's roadmap for foreign banks.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Share Infoline Tata Safari Dicor

Stories in this Section
Monsoon deficient in 133 dists

Global airlines operating from India impose Rs 300 surcharge
GHCL hikes soda ash price by Rs 400 per tonne
SC notice to BSNL on Walky row
NTC to lease out 30 mills to pvt sector — Short of cash for modernising all mills
Nafed to procure cotton, soya at support prices
Small, mid-cap stocks shine; Sensex hits 8,700 intra-day
MFs invest Rs 9,000 cr in H1
Banks expect hike in interest rates: Survey

The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | The Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |

Copyright 2005, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line