Interest Rates not come down Easily – ICICI
Domestic inflation and the depreciation of the rupee are likely to keep interest rates high for a while, Chanda Kochhar, managing director and CEO, ICICI Bank.
A rupee depreciation basically indicates a situation in which demand for the dollar is far higher than supply, pushing up the price of the currency in local terms. The tighter dollar supply is because everybody wants to hold on to dollars, she told the paper.
US banks are reducing their exposure to European banks which, in turn, are reducing their exposure to the industry. That, in turn, will keep liquidity very tight and consequently, interest rates high.
However, she did not expect Indian companies that raised long-term, low-cost loans from the dollar market to be significantly impacted by this development.
What could change is the ability of Indian companies to raise fresh funds from foreign markets. In that case, pressure on Indian banks could go up, Kochhar told the newspaper. The possibility that companies could lower demand for local loans by taking loans overseas and relieve pressure on interest rates is also diminishing.
Meanwhile, the bank is not letting go of any profitable opportunities. At the Reuters India Investment Summit, Kochhar said ICICI Bank was eyeing the option of buying the loan portfolios of European banks keen to deleverage.
She added the bank had already picked up some India-related assets, although she ruled out the acquisition of any European bank. Click to Apply for ICICI Bank loans –ICICI Home Loan
As far as local credit demand was concerned, Kochhar said it would remain muted since project executions had slowed and companies were delaying investment decisions.
Nevertheless, she thought retail loan growth would continue to remain buoyant, although corporate lending would remain difficult, with some loans requiring restructuring. Small and medium enterprises remain the most vulnerable to slipping into the bad debt category, she said at the conference. Listen new album of Amrinder Gill Judaa
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