ICICI to cut the interest rates soon
By Neelima Shankar
Mar 30, 2009
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The largest private sector lender, ICICI Bank announced that it would soon resort to a cut in its interest rates. The Bank's CEO and MD K V Kamath said, "ICICI will look into interest rate reduction in a few weeks."

The bank pointed out that there is scope for banks to reduce the interest rates by 50 basis points.

Earlier the bank had been hesitant to cut down its interest rates in spite of the easing monetary policy by the RBI. Asked about the hesitance, Kamath said that every bank takes an action regarding the rate cut after reviewing its cost of funds. "Banks are clearly waiting for cost of funds to go down. Banks should start considering 0.50 percent cut in interest rates," he said.

Kamath said that the rate cut would happen at in next few weeks and "interest rates are coming down, (they) should come down to single digit."

He also added that though the deposit rates have come down, bond yields are still high. "Things are moving in that (interest rate cut) direction, but there are some barriers left. Deposit rates have gone down, there has been easing from the central bank but the bump is that 10-year treasury bonds, which should have been less than 5 percent, has spiked more than 6 percent," he said.

The credit growth of ICICI has also been stable in the recent past and in the coming times there are expectations of higher growth. "We will have full normalcy by September ... Corporate India is going to be competitive again," said Kamath.


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