Bankers expect interest rates to remain stable till March 2010

Last Updated: Wednesday, October 28, 2009 - 22:38

New Delhi: Interest rates are expected to
remain stable till March 2010 as Reserve Bank has left key
policy rates unchanged, bankers said on Wednesday after meeting with
Finance Minister Pranab Mukherjee here.

"Interest rates should be stable up to March," Punjab
National Bank Chairman and Managing Director K R Kamath told
reporters here.

Oriental Bank of Commerce CMD T Y Prabhu, too, said, "I
do not see any change in the interest rates till March."

However, National Housing Bank Chairman and Managing
Director S Sridhar said that cost of advances to the real
estate companies would go up as the Reserve Bank has increased
provisioning.

In its quarterly monetary review, RBI yesterday said real
estate prices, after showing some corrections in the later
part of 2008 and early part of 2009, have risen significantly
in major cities.

To prevent any non-performing assets (NPAs) in the
commercial real estate market, the apex bank raised
provisioning requirement for banks from 0.40 per cent to 1 per
cent for commercial realty.

Although RBI raised the Statutory Liquidity Ratio (SLR)
by one percentage point to 25 per cent, it refrained from
tinkering with other key policy ratios and rates like Cash
Reserve Ratio, repo and reverse repo rates.

Referring to the meeting with the Finance Minister,
Kamath said Mukherjee reviewed the financial performance of
the PSU banks and financial institutions.

The meeting also took note of low credit flow to the
productive sectors and focussed on agriculture credit,
infrastructure lending, housing and education loans, he added.

Bureau Report



First Published: Wednesday, October 28, 2009 - 22:38

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