Reacting to certain reports saying that other banks might follow State Bank of India’s lead by increasing their interest rates, ICICI Bank managing director & CEO, KV Kamath, indicated there is no pressure on banks to raise interest rates, given the prevailing comfortable inter-bank liquidity. This follows a move by State Bank of India (SBI) announcing its plans to raise interest rates for medium- and longer-term deposits.

"The systemic liquidity is comfortable now in the banking system. There is no systemic demand as well," Mr Kamath said here on Tuesday at a press meet organised by Confederation of Indian Industry (CII). He said that the absence of credit off-take meant no immediate pressure on liquidity in the system.

Being the first CII president, Mr Kamath said the country was likely to grow at around 8.61% during the current financial year. However, he believed that low agricultural productivity would remain a challenge. In his leadership, the CII is preparing a long-term vision for the country.

According to Mr Kamath, India is poised to grow steadily in the next 20 years. "India’s growth story will continue for a long period of time. The strong savings rate (34.8%), investment rate (35.9%) and consumption rate (67%) will propel the growth."

However, he stated that all this would come with a cost of its own. He said in spite of good growth, the economy would face many challenges— weak agricultural productivity, rising commodity and consumer prices, pressure on balance of payment and core sector bottlenecks being some of them. On the very hot and debated topic of inflation rates, the banking honcho said, "Inflation is not significantly different from other advanced countries. Commodity prices have peaked in 2008."

Referring to his future plans, The CII president mentioned that Africa would soon emerge as an important business destination. CII, whose journey began in Kolkata, is looking to tap the opportunities by setting up four offices across the continent.