Rates won`t rise now, but pressure likely in Q2: Chanda Kochhar - The Economic Times

February 10, 2010

NEW DELHI: ICICI Bank believes a rise in interest rates will not take place immediately. “Clearly, we will see no immediate pressure on interest rates. But we will see upward pressure on interest rates, not from the beginning of the next fiscal, but I would say the second quarter of the next fiscal,” ICICI Bank CEO and MD Chanda Kochhar said on the sidelines of an event in New Delhi on Thursday.

She added that interest hikes are not always driven by RBI’s policy announcements but are a factor of demand and supply. “There is enough liquidity in the system right now and hence, there won’t be any upward pressure on interest rates immediately.”

Responding to a question on whether the proposal for reforms in America’s banking system debated in the US Senate will have an impact on Indian banks, Ms Kochhar said: “Our banking system is built on strong foundations and banks are well capitalised, there is also ample liquidity in the system, hence, there is no need to initiate such action.”

The US Senate is currently debating reforms being proposed by former Federal Reserve chairman Paul Volcker, who has proposed curbs on proprietary trading activities of banks, a move that could limit the activities of some of the largest financial institutions in the US.

Recently, Axis Bank MD & CEO Shikha Sharma confirmed to ET that the bank was restructuring its private equity business to facilitate transfer of ownership to the company’s management in line with global policy moves that have proposed that commercial banks separate their proprietary investment activities. Ms Kochhar said ICICI bank was not contemplating any such move.

RBI may not raise rates in Apr policy: Kamath

ICICI Bank non-executive chairman KV Kamath has said RBI may further tighten money supply to tame inflation by asking banks to keep more cash with it, rather than raising policy rates in its annual policy in April. “My feeling is based on market forces, RBI may not change policy rates. They will probably keep an eye on inflation,” he said. — PTI