New Delhi: The target of 20 percent growth in retail credit for 2007-08 has forced ICICI Bank to extend its festival offer. With the recent hike in interest rates, most of the banks are struggling to meet their targets and this is true for ICICI Bank also. While, the bank recorded a growth of 40 percent in retail credit during the past two years, it is finding it hard to meet its 'rather modest' target this year.

Earlier, the bank had announced rate cuts and other discounts on its various retail loans. These cuts were offered initially till October 31, keeping in mind the Reserve Bank of India (RBI) monetary policy review. Everyone was expecting a rate cut by RBI, but the hopes were dashed as RBI didn't change the rates, on the contrary, it announced a 50 basis points hike in Cash Reserve Ratio (CRR), to control the excess liquidity in the market.

Confronted by this situation and little or no customers in sight, banks didn't raise the interest rates or take back the discounts they had offered on various retail and other loans. Instead, the banks decided to cut deposit rates to ease the pressure on their profit margins.

This step by ICICI Bank, is most likely to match the State Bank of India (SBI) offer in which it had offered reduced interest rates for home and other loans till December 31. The extended festive offer by ICICI Bank doesn't have any deadline at present.

V Vaidyanathan, ED, ICICI Bank said, “We are still closely watching the competition. The programme (festive loan offers) is still on." Good performance in the third and fourth quarters is crucial, if the bank has to meet its targets. “In the third and fourth quarters, we expect credit to pick up. Retail book should grow at 20 per cent. The Corporat book is doing very well in India,” he added.