Two major private sector banks, HDFC Bank and Axis Bank, are not expecting any immediate positive impact of the recent liquidity and rate cut measures by the Reserve Bank of India (RBI) on their credit and deposit portfolios.
Paresh Sukthankar, executive director, HDFC Bank, has said that the bank has witnessed a moderation in the overall growth of loans as well as the term deposits due to the prevailing economic scenario in the country. In the last few months, HDFC Bank’s two-wheeler as well as commercial vehicle loan portfolios have not grown at a healthy rate.
“In the third quarter of the current fiscal, since auto sales too have dropped drastically, these portfolios are going to get impacted more,” he added.
Sukthankar has said that although liquidity is no more an issue in the Indian banking space at present, the interest rates have not gone down substantially as bankers are currently adopting a cautious approach. A senior executive of Axis Bank said that he expected the BPLR to fall by at least 100 basis points within 4-6 weeks. “However, it may fail to stimulate the credit growth of the Indian banking space as consumer confidence is at its lowest. Also, the corporates are holding back their capex plans in anticipation of a lower interest rate regime. Next quarter may not be very rosy for the Indian banks,” he said.
The presence of adequate liquidity in the Indian banking space for a prolonged period would eventually lead to a substantial cut in the term deposit rates, finally resulting into the reduction of lending rates in a bid to boost the credit off-take, observed Sukthankar
“Unless the liquidity dries up again, I foresee another round of reduction in deposit as well as lending rates to happen within a few weeks. I do not anticipate a cut in CRR by the regulator in the near future. Fortunately, we seem to be heading at around 7% inflation levels by the end of this fiscal,” he said.
Not in a hurry
• HDFC Bank witnessed a moderation in the overall growth of loans and term deposits due to the prevailing economic scenario
• HDFC’s two-wheeler and commercial vehicle loan portfolios have not grown at a healthy rate
• Axis Bank says even a BPLR fall by 100 basis points may not stimulate the credit growth of the Indian banking space