Cut key interest rates by 100 bps, says Kamath

New Delhi | Updated: Dec 31 2008, 07:49am hrs
Forecasting that inflation is inching towards zero, ICICI Bank managing director and CEO K V Kamath on Tuesday suggested to the Reserve Bank to further cut key policy rates by 100 basis points as part of a calibrated move to usher in a low interest rate regime.

"I think just now let us start by cutting them (repo and reverse repo rates) by 1% or so, and see what happens," he told PTI when asked for what his advise would be for RBI to reverse the economic slowdown.

Kamath said, "It would be in everybody's interest to work interest rates down. Inflation clearly talked of being near zero. I think it is the right time to work on this front (reducing interest rates) now.

Meanwhile, the bank is quietly and selectively re-engineering loans of existing home loan customers.

Since a fortnight, ICICI Bank has been offering to select customers a restructuring scheme whereby it would reduce the interest rates on home loans if the customer agrees to park a minimum deposit of about Rs 10,000 for an agreed period.

The scheme is applicable for customers who have taken a loan below Rs 20 lakh, with the loan disbursed at one shot. The scheme is valid until January 31, a bank official said.

As the scheme is applicable to select customers, the rate cut benefit will not be passed on to all borrowers unlike its state-owned peers.

However, the bank officially denied this scheme was in force. According to some officials of the bank, the scheme offers select existing home loan borrowers, especially who are charged an interest rate of around 14%, to restructure the rate down by almost 300-350 basis points.