Business Daily from THE HINDU group of publications
Saturday, Aug 05, 2006

Cross Currency

Group Sites

Money & Banking - Interview
`Ministry, banks must find middle path on rates'


The Finance Minister, Mr P. Chidambaram, has asked PSU banks to keep rate hikes in abeyance. Hence, banks might have to roll back hikes that were announced recently.

Industry veteran Mr N. Vaghul believes that the Finance Minister is concerned about the higher interest rates scenario. He feels that banks and the Finance Ministry need to find a middle path. Excerpts of CNBC-TV18's exclusive interview with Mr N. Vaghul

How would you read this? Given the realities of the market today, would you say it is a regressive step?

I have not seen this news item. But if what is said is true, then it is interesting to note that the Finance Ministry is concerned about the higher interest rate scenario. The Reserve Bank of India is concerned about inflation and banks are concerned about their net interest margin.

We had a period of two years where there was a happy convergence of these three factors but today there is a divergence. We have to find a centre point in all these three points of difference and somehow work things out.

Can there be a centre point; because the rates are hardening across the world, they probably need to harden in India as well? What can be a middle point for banks?

I look at it not only from the point of view of someone who is connected with the banking industry but also as a person interested in economy. I had gone through this period of high interest rates in the mid 90s and have seen what damage it could do to the economy. I do not want this to happen again.

All banks have businesses to run and they need to raise rates because of that. Does the government really have a right to step in and stop them from doing so?

I'm not sure of what the government had said as I haven't seen the facts. But I agree that the government cannot give a direction on this front for banks. It is mockery of autonomy.

More Stories on : Interview | Interest Rates

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

Stories in this Section
Vidarbha package disbursal gains speed

Forex reserves rise $675 m
Rupee tad up against dollar
Mumbai flood: GIC loss put at Rs 650 cr
Chidambaram defends advisory to banks on PLR
PSU bankers `surprised'
Rlys in pact with SBI for ATMs at 681 stations
Bill soon to empower Govt to dissolve bank boards
UBI road map to push export credit
Canara Bank upgrades Tiruchi office
Rate hike: SBI board to meet next week
Bank of Rajasthan hikes deposit rates
Bond prices remain flat
T-bills auction on August 9
Central Bank of India signs pact with APSFC
Non-food credit up Rs 9,394 cr
Call rates unchanged
`Ministry, banks must find middle path on rates'

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

Copyright 2006, 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