Interest rates not to rise immediately: O P Bhatt
By Joseph Samson
Sep 20, 2010
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With the Reserve Bank of India raising key policy rates in the second quarter of monetary poliocy review, the largest lender of the country, State Bank of India has said that it would not be raising interest rates before 3-6 months.

"I am not seeing the possibility of any immediate change in interest rates," SBI Chairman O P Bhatt said.

He however added that there is a possibility of rise in interest rates if there is change in economic condition.

He also said that there may be a 25 basis points rise in base rate in case of change in economic condition.

As a result of this, rise in lending rates can also be expected.

RBI has raised repo rate by 25 basis points to 6% and reverse repo rate by 50 basis points to 5%.

"One important consequence of negative real rates is that banks have seen a deceleration of deposit growth, as savers look for higher returns elsewhere."

"If bank credit is not to become a constraint to growth, real rates need to move in the direction of encouraging bank deposits," RBI said in its mid quarterly review.


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