Mar 15, 2012, 04.03 PM | Source: CNBC-TV18
Bankers feel that the central bank may change rates only in its policy review on April 17. Only then, bankers may pass on the rate cut to borrowers.
As expected, the credit policy review was basically a non-event for the market and policy makers, the Reserve Bank of India has left key rates unchanged.
Some bankers feel that the central bank may change rates only in its policy review on April 17. Only then, bankers may pass on the rate cut to borrowers.
In an interview to CNBC-TV18, A Krishna Kumar, MD, State Bank of India not much movement is expected in the interest rate scenario in March. In the first week of April there could be some review of the way the rates have been moving and the way the cost have been panning out, he added.
However, he was quick to add, "I don’t think that even the first week of April if at all there is some rate adjustment it would be minor nothing very major and probably we would need to wait till the April policy announcement before any major changes happen in the interest rates."
MV Tanksale, CMD, Central Bank of India also agrees that credit policy review on April 17 is going to be decisive.
"RBI has been providing us a lot of liquidity by reducing the CRR by 75 bps and as a banker there is a question in my mind that is interest rate only factor influencing the growth. RBI has to look at fiscal deficit. I think we should wait for tomorrow’s Budget and all put together the scenario should emerge in April by the time the RBI can take one more call at the credit policy time on interest rates," Tanksale explained.
Meanwhile, NS Venkatesh, Chief General Manager & Head Treasury, IDBI Bank says that liquidity pressure will ease off and there will be no higher rates that are prevalent currently in the market for CDs.
"Coming into the bond yields currently with the market factoring in that there is more fight on inflation rather than on growth by RBI because of the tight rope walk that the RBI is doing, the bond yields have moved up to 8.36 levels which is the peak which was there yesterday. I believe that going ahead with not much borrowing or new issuances coming into the market during the last week of March or first week of April and huge redemptions happening in first week of April, the bond yields will also cool off going into the April policy," he adds.
Venkatesh believes that in April we can definitely expect a rate cut to give a little bit impetus to the growth. With that rate cut coming in the bond yields will definitely rally, he adds.